Tax-exempt hospitals receive billions of dollars in tax exemptions each year. In exchange, they are required to invest in the health of their communities. But to do that, hospitals must first identify the health needs of the communities they serve. States can work to make sure hospitals truly seek out and act on meaningful input from a wide range of community representatives — not just community members on a hospital’s board or leaders from one or two high-profile community groups.
State Requirements Can Exceed Federal Standards
To identify community needs, federal legislation requires tax-exempt hospitals to conduct community health needs assessments (CHNAs) every three years, and develop a plan to meet those needs. The US Internal Revenue Service (IRS) requires tax-exempt hospitals to solicit and take into account input from at least one state, local, or tribal public health department as well as from medically underserved, low-income, and minority populations in their communities. It also says that hospitals may solicit input from consumer advocates, community organizations, academics, local governments, school districts, providers, health plans, business, and labor representatives.
Many states have aligned their state CHNA requirements or guidelines with IRS requirements and/or with standards set by the Public Health Accreditation Board (PHAB), which accredits state and local health departments.
Many states also have statutes or guidelines governing the CHNA process that go beyond federal requirements. For example,
- New Hampshire’s statute requires hospitals to consult with service providers and local government officials, as well as many of the same entities that IRS and the PHAB mention;
- A Texas statute requires hospitals to consider consulting with health science centers; and
- Massachusetts voluntary guidelines identify neighborhood associations, schools, churches and clergy, law enforcement, and housing authorities as possible sources of community input.
This state action is significant in light of a 2018 study that found that state CHNA requirements are associated with higher hospital spending on community benefits, and suggesting that state-level community benefits regulations are associated with greater hospital spending on community benefits. See the National Academy for State Health Policy’s How 10 States Keep the ‘Community’ in Hospitals’ Community Health Needs Assessments infographic for examples of 10 states’ statutes and guidance.
Table 1 shows states that address community involvement in the CHNA process either through state statute (California, Maryland, New Hampshire, New York, Rhode Island, and Texas), or through voluntary guidance documents (Maine and Massachusetts).
- Four states (California, New Hampshire, New York, and Rhode Island) statutorily require that certain communities or groups be represented in the CHNA.
- Two states (Maryland and Texas) explain in their statutes that hospitals “may consult with” (Maryland) or “shall consider consulting with” (Texas) certain groups or entities when assessing community needs.
- At least five states (Idaho, Illinois, Indiana, Vermont, Washington State) have state CHNA statutory requirements that do not specify any required representation.
Table 1. Representation Required (or Encouraged*) in the Hospital Community Health Needs Assessment Process
|Any appropriate person||√|
|Health care providers||√||√†||√|
|Health science centers||√|
|Local government officials||√||√||√||√†||√|
|Local health department or public health authority||√||√||√**||√†||√|
|Members of the public||√||√|
|Racial or ethnic minority groups||√||√|
|Disadvantaged populations, including low-income||√||√|
*State statute or guidance recommends but does not require representation in the CHNA process
**New Hampshire established Regional Public Health Networks
†Encouraged in the New York State Prevention Agenda
How States Enforce Community Benefits
While hospitals that fail to meet IRS community health needs assessment requirements may ultimately have their federal tax-exempt status revoked — as happened to a hospital in 2017— states have wide latitude to use other levers to enforce their own community benefits guidelines. Currently, few states codify enforcement levers in their statutes. Among those that don’t, some report success in gaining hospital compliance through transparency measures. For example, many states post hospitals’ community health needs assessments on state websites. An annual press release from the Massachusetts Office of the Attorney General also draws attention to the hospitals’ community benefits reports, which encourages hospitals’ timely compliance.
Table 2. State Statutory Levers for Enforcing Community Benefits
|Violators must provide an explanation||√|
With new governors recently taking office in 20 states in early 2019, states have an opportunity to consider hospital community benefits and community health needs assessment policies as part of a statewide, cross-agency effort to improve health using all the levers at a state’s disposal, including tax policy and enforcement. Meaningful investments in community health are possible when states hold hospitals accountable for keeping the community at the center of community health needs assessments.
The National Academy for State Health Policy convenes a Hospital Community Benefits Workgroup composed primarily of officials from state attorneys general offices and state Medicaid and public health departments. The workgroup is currently exploring how states can develop more meaningful hospital community benefits investments that align with state public health priorities and address the health-related needs of communities.
For more information about this initiative, or to share information on your state’s work in this area, please contact Amy Clary at firstname.lastname@example.org. Thanks to the following states’ officials for their help with these materials: California, Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.
Produced in partnership with the Robert Wood Johnson Foundation and the New England States Consortium Systems Organization.