administrative law

Defining Community Benefit

Originally posted 2008-09-13 12:33:46 -0500. Promoted. -- GH

Current law requires hospitals to satisfy the community benefit standard in order to qualify as tax-exempt charities under section 501(c)(3). The Hospital Compliance Project (the Project) was initiated in 2006 by the Internal Revenue Service (IRS) to study nonprofit hospitals and community benefit, as well as to determine how hospitals establish and report executive compensation. [IRS: Hospitals and Community Benefit - Interim Report (30 Jul '07)]

In the late '50's the criteria for maintaining tax exempt status included a requirement that hospitals serve any patient coming through the emergency room doors. Over the course of the past roughly 50 years that requirement has been steadily chipped away, leading hospitals to charges and counter-charges of - among other things - "patient dumping". From Atlanta:

"These other hospitals are [nonprofit] tax-exempt organizations, and both the state and federal government are giving them tens of millions of dollars in tax breaks,” he said. He declined to identify any hospital.

How did this happen? The easy way.