I. History of Community Benefit

Charitable organizations have been defined by law and regulated by government for centuries. United States charitable law has its roots in The British Statute of Charitable Uses. This 1601 statute organized the structure of charitable giving and attempted to define public and private roles and responsibilities connecting charitable giving to tax reductions.^{Reference Bittker and Rahdert9} A few hundred years later, the Wilson-Gorham Tariff Act of 1894 was passed in the United States, forming the basis for the requirements for charitable organizations' tax exemption in the United States. The Act imposed the first peacetime income tax and included a two percent tax on the income of corporations. Most importantly, the Act included an exception on income tax for charitable organizations.^{Reference Castro10}

Many hospitals at this time acted as philanthropic organizations to care for the poor even though they were not yet classified as charitable organizations under law. A 1956 Revenue Ruling allowed hospitals already acting as charitable organizations to qualify as a 501(c)(3), or a non-profit organization, recognized by the Internal Revenue Service as tax-exempt.^{Reference Crossley11} Hospitals with 501(c)(3) status do not pay federal income tax on net income and are exempt from some state taxes.¹² The tax code is of great advantage to hospitals. In 2002, the tax exemption for non-profit hospitals had an estimated value of $12.6 billion, more than doubling to $24.6 billion in 2011.^{Reference Rosenbaum13} This tax incentive encouraged many hospitals to become non-profits. By 2014, around 78% of all U.S. hospitals were non-profits.^{Reference James14}

Tax-exempt status does come with obligations. Hospitals must provide a benefit to the communities they serve. Before 1969, the benefit mostly took the form of “charity care,” medical services to those who could not afford it. The establishment of Medicaid and Medicare decreased the need for charity care, and the wording of non-profit hospital requirements was broadened to include “community benefit” to promote spending that encouraged population health.¹⁵ This broader definition included providing education, supporting research, and implementing programs that improve the health of the community.¹⁶

As increasing evidence pointed to the importance and role of community health, the Affordable Care Act required non-profit hospitals to conduct a community health needs assessment every three years and to adopt an implementation strategy to address identified needs.¹⁷ Non-profit hospitals are required to file Schedule H (Form 990) with the Internal Revenue Service to report their community benefit efforts each year.¹⁸ Reports must include net, unreimbursed cost of charity care, community health improvement activities, and community building activities with supporting evidence of their connection to health outcomes.^{Reference Spicer19}

Even with final regulations adopted in 2014, the guidance on what “community benefit” is and the reporting criteria are still vague. Hospitals are largely left to determine for themselves how to assess and present community health needs — that is, what sort of data to collect and report.²⁰ Although there is a requirement to “take into account input from persons who represent the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health,”²¹ there is no clear guidance on how to define those who represent the broad interests of the community and how to include the voices of underrepresented populations in the discussion.^{Reference Crossley22} In addition to the uncertainty around how best to conduct a community health needs assessment, there is little consensus about what “community benefit” means, even though the concept, and requirement, have been around for decades.²³ The ACA and implementing regulations did not provide further clarification or specification on what might count as “community benefit.” This uncertainty regarding the definition of community benefit allows hospitals to implement solutions in very different ways. Instead of focusing on community health improvement, the vast majority of hospitals medicalize population health factors that stem from poverty and present them as treatable illnesses for which they can provide care, rather than treating the root causes of ill health.

II. Community Benefit Allocation

Hospitals that receive tax exemption are expected to spend some portion of their total tax exemption dollars on community improvement and health.^{Reference Nelson24} In 2015 the IRS reported to Congress that “32% of community benefit spending in 2011 [went] to offset losses from government programs, 24% [was] devoted to providing financial assistance to low-income patients, and 4% [went] to community health improvement.”²⁵

Community health improvement includes activities that can enhance the infrastructure of the community. According to Schedule H (Form 990), a non-profit hospital can engage in “community building” as part of community health improvement.²⁶ This category includes activities that address social determinants of health such as investing in physical improvements (e.g., providing and rehabilitating housing for vulnerable populations), economic development, community support, environmental improvements, leadership development and training for community members, coalition building, community advocacy, and work-force development.^{Reference Tahk27} Hospitals spend less than 1% of total expenses on community building activities.²⁸

The vast majority of community benefit dollars are spent on uncompensated care, Medicaid costs, and charity care. Uncompensated care represents 2.58% of total expenses. Medicaid costs are 3.295% and charity care is 6.01%. In contrast, the mean percentage spent on community health improvement is far less. Hospitals spend .02% of total expenditures on physical improvements in the community, .01% on economic development, .002% on community leadership, and .03% on workforce development.²⁹ “Compared with 2012, hospitals in 2015 spent $3.1 billion (20.14%) more on community benefit despite spending $804 million (16.17%) less on charity care. Hospitals in Medicaid expansion states increased spending on subsidized health services and Medicaid shortfalls at rates higher than hospitals in non-expansion states. The latter increased spending at higher rates on community health improvement and cash/in-kind contributions.”^{Reference Alberti, Sutton and Baker30}

Spending on uncompensated or undercompensated care does not have as much community impact as community health improvement activities. The health impact pyramid is a tool commonly used to describe the impact of different types of public health interventions.^{Reference Frieden31} The pyramid posits that emphasis on community building programs, those that hospitals least use, have the most population impact and require the least individual effort. The continued emphasis on using community benefit dollars to pay for uncompensated care, Medicaid costs, and charity care allows hospitals to fulfill the new ACA requirements for tax-exempt status without advancing the goal of confronting and decreasing poverty-related health determinants.

III. Medicalizing Community Need

In an effort to change the distribution of community benefit dollars, the ACA made efforts to encourage hospitals to better understand and address community need. However, the current mechanisms to determine need and the resulting implementation have not led to hospitals addressing social determinants of health. Instead, hospitals identify community need by identifying and treating disease–offering medical solutions for community problems.

Community health needs assessments require eliciting feedback from the community. One challenge that hospitals conducting assessments face is garnering diverse representation in response to community outreach. Commonly used community engagement methods such as mailers, online surveys, and community forums tend to elicit the most responses from well-educated and non-low-income individuals.^{Reference Druckman32} In our home community of Sangamon County, the majority of participants in both a survey (64%) and a forum (90%) for a community health needs assessment were college educated. Yet only 34.3% of the total population of Sangamon County has a college degree.³³ Less than 27% of the survey and forum participants earned below $40,000 per year even though 40% of the total Sangamon County population fell into that category.³⁴ Because well-educated and higher income individuals have fewer challenges with social determinants of health, they are more likely to see community health problems as purely medical in nature.³⁵ This was borne out in the survey and forum results for Sangamon County, which found the community needed more access to care, needed to reduce asthma, and needed mental health services. It failed to identify the lack of good-paying jobs, lack of healthy rental housing, or community violence and community systemic racism leading to these issues.

Indeed, the five most commonly identified community health needs found in Illinois I-Plans, a county public health version of a community health needs assessment, were associated with diabetes, obesity, behavioral health, access, and cancer.³⁶ None of these community health needs directly identify social determinants of health. Instead, they point to issues of health care access or specific medical illnesses.

Diabetes and obesity, in particular, are identified as major problems in many community health needs assessments. However, similar to medicalizing the community need, most implementation plans also medicalize the solution. Many diabetes and obesity community implementation plans support increased education for those with obesity, prediabetes, and diabetes. Historically, approaches to dealing with diabetes and obesity have been individualistic, focusing on self-management and education.^{Reference Norris, Clark and Utz37} These methods have shown positive results in short term control but results are not maintained over the long term.^{Reference de Fátima Ferreira Grillo38} These individual education and self-management strategies are not adequate to create long term health improvements and address community health. Although education is recognized as an important piece of diabetes treatment,^{Reference Gottlieb39} greater evidence supports the role of responding to social determinants of health in improving diabetes and obesity.

Programs that address social determinants such as food access and economic stability have shown promise in improving health outcomes for those dealing with obesity and diabetes.^{Reference Seligman and Gucciardi40} Improving food access in low-income areas can help to prevent these diseases as well.^{Reference Diez-Roux41} To fulfill the intent of the requirements for nonprofit hospitals, more resources should be spent on prevention methods such as confronting food access and economic stability. Social determinants, though important, are never easy to confront. Due to these challenges, greater coalitions that include hospital systems but do not rely on them solely need to be at the forefront in tackling social determinants.

IV. Solutions — Hospitals Addressing the Social Determinants

Several solutions do exist to aid hospital systems using their community health needs assessments to confront social determinants in addressing health outcomes. One way to start confronting this problem is to change the process of community health needs assessments. Medical questions with medical answers lead to medical conclusions. A more community-centered and focused view can help to find the reasons behind why eating well is difficult, finding time to exercise is impossible, or how housing is worsening chronic medical conditions. A 2014 report funded in part by the Robert Wood Johnson Foundation, examines 300 non-profit hospitals' needs assessment and implementation process. The hospitals that focused on social determinants of health asked questions about community needs, not just health. Many also used a multitude of community partnerships to aid in their needs assessment strategies.^{Reference Prybil42} Processes exist that allow community voices to be heard and allow for sustainable solutions that start to address the real problems behind health challenges.

Another solution is better connecting the health care sector to public health. A series of major reports in recent years by prominent organizations including the Institute of Medicine, The Trust for America's Health, and the Robert Wood Johnson Foundation have emphasized the importance of these closer linkages as a key strategy for improving community health and restraining health care expenditures.⁴³ Strong connections with the communities that non-profit hospitals serve will prove to be a key strategy in confronting poverty-related health determinants. For example, in Macon County, North Carolina, with a population of over 33,000, the Angel Medical Center is the single non-profit hospital that services this rural western North Carolina county. The community health needs assessment report from 2015 identified poverty as a determinant of health and proposed economic development to improve health outcomes. Relying heavily on community input, the results from the assessment allowed the community to begin to confront social determinants.^{Reference Exworthy44} A power shift during the health needs assessment process from those in power to vulnerable populations and community members aided in the successful linkage of social determinants to health outcomes.

Another solution is partnerships with non-hospital-based groups to inform the implementation plan. In our home community of Springfield, Illinois, asthma was identified by the hospitals as a priority, with education and training as leading options for responding to the problem. A group of community leaders, the Springfield Community Health Roundtable, organized by a former Chair of Internal Medicine, with him as the only representative from health care, attempted to give greater voice to community leaders to define what their community needs were. In response to the community health needs assessment, the group identified improved housing, a determinant in the increase of childhood asthma, as the most pressing need for their community.

Lastly, a focus on policy is a possible solution to confront social determinants of health.⁴⁵ The Community Health Roundtable in Springfield commissioned a white paper on local housing standards that showed the effects of poor housing on childhood asthma and lead poisoning and examined solutions to improving rental properties. According to the white paper,

The roundtable is looking at pediatric asthma through the preventative lens of policy, housing codes, housing stock, and landlords.