When States Mandate Hospital Community Benefit Reports, Provision Increases

We examined the variation in community benefit and charity care reporting standards mandated by states to determine whether state-mandated community benefit and charity care reporting is associated with greater provision of these services.

We used 2011-2019 data from IRS Form 990 Schedule H for 1,423 nonprofit hospitals to create a sample of 12,807 total observations. Random effects regression models were used to examine the association between state reporting requirements and community benefit spending by nonprofit hospitals. Specific reporting requirements were analyzed to determine whether certain requirements were associated with increased spending on these services.

Nonprofit hospitals in states that required reports spent a higher percentage of total hospital expenditures on community benefits (9.1%, SD = 6.2%) compared to states without these requirements (7.2%, SD = 5.7%). A similar association between the percentage of charity care and total hospital expenditures (2.3% and 1.5%) was found. The greater number of reporting requirements was associated with lower levels of charity care provision, as hospitals allocated more resources to other community benefits.

Mandating the reporting of specific services is associated with greater provision of certain specific services, but not all. A concern is that when many services must be reported, the provision of charity care might be reduced as hospitals choose to allocate their community benefit dollars to other categories. As a result, policymakers may want to focus their attention on the services they most want to prioritize.