A Community Benefit Investment Thesis

Investment is one element of a complete community benefit strategy.

Accepting a broader definition of health means that a healthcare delivery organization embraces the determinants of health beyond access to care that serve a significant role in an individual’s health status. What better foundation than that for community benefit? Those determinants (behaviors, environment) are often represented by place: where people live, work, and play and the social dynamics represented within.

A traditional community health improvement approach would make it difficult to effectively insert health improvement programming into every place where people spend time. But there is usually an established entity (individual, organization, or small group) already promoting health and healthy living in these places. Accepting the determinants of health model means the industry must begin to shift community benefit spending to the determinants of health. Hospitals are unlikely (and probably unnecessarily) to create direct programmatic responses to improving these health producing factors.

But there are plenty of organizations that do. These may be arts groups, urban gardens, social entrepreneurs, community leaders, etc. An investment strategy is part of helping those organizations scale their reach and broaden their impact.

A community health improvement investment strategy uses financial resources to scale the efforts of these place-based community members. Given the expanded definition of health, the programmatic burden and need of health improvement is too large for any single healthcare delivery organization, a group of organizations, or even a group of organizations plus local government municipalities to create and sustain.

Community Health Improvement Investment (CHII) is defined as financial support provided to local organizations for the use of expanding and improving programming affecting the improvement of the determinants of health and health improvement. Converting community benefit spending to investment dollars will allow healthcare delivery organizations to improve social and environmental factors without undertaking the programmatic necessity to achieve community-wide impact.

Every organization will have to create an investment thesis depending upon its objectives to include investment targets (i.e., nature and requirements of investment will vary based upon business structure of the receiving organization), risk tolerance (i.e., tested and proven ideas vs those that hold promise), and investment principles. Several suggested principles are listed below.

  • Partnerships. Whenever possible a CHII strategy should promote partnership within the community by investing in collaborative efforts involving more than one organization. Multiple organizations working together toward a common goal can scale efforts of health improvement.
  • Built Environment. Invest in organizations and efforts that build health into expanding or redesigning infrastructure. The built environment, through health-oriented design, can promote healthy behaviors.
  • Culture. The characteristics (beliefs, religion, social norms, etc.) of the groups people spend their time with have a broad impact on health status. Efforts to create a culture of health — intentional effort to make healthier decisions — are worthy of investment.
  • Self-Management. Both on an individual and community level, the principles of self-management can lead to broad impact. Turning over the responsibilities of health improvement to individuals and communities will lead to broader reach.
  • Community Leadership. Social capital is the idea that social networks have value. Community involvement has health benefits, namely the building of social networks. These networks start with social participation and involvement and can evolve into community betterment efforts.
  • Implementation. Planning and ideation are important to realizing the creative process; however, many good ideas are never realized because of a lack of implementation. Focus investment on mature ideas ready for implementation. There are other routes to fund the important efforts of convening and idea gathering.
  • Scale. Promote scale whenever possible. The problem of unhealth requires efforts that reach the broader population. A major advantage of community-based health improvement initiatives over medically-based programming is their reach. Instead of one-to-one or one-to-few programming, invest in efforts that have scaling built in: where the audience grows disproportionately compared to production costs.

Toward a New Community Benefit Strategy for Healthcare Delivery Organizations

Community benefit strategy for healthcare delivery organizations is evolving — and for many of those organizations the Affordable Care Act is bringing the importance of having a strategy into focus. While community benefit has existed in some form since the founding of non-profit healthcare — -and really is the reason these organizations still hold not-for-profit tax status — -the function has been carried out primarily as an income statement function. Far and away the leading community benefit line item has been and continues to be charitable care and the unfunded care cost of government healthcare programs.

The United States spends most of its healthcare dollars on access to care, which accounts for only 10% of health status. (New England Healthcare Institute, 2005)

The Affordable Care Act has renewed the attention community benefit receives from organization leadership. The requirement of a Community Health Needs Assessment and accompanying Implementation Plan is propelling organizations to more intentionally affect community health outcomes. It has also renewed organizational attention to public health, particularly the determinants of health.

The vast majority of healthcare delivery organization expenditures is spent on providing medical care. Spending on the provision of medical services will continue to dominate the share of organization expenditures. And it should. It is what these organizations do best and the majority do it well.

But access to care isn’t what keeps people healthy. Access to medical care only accounts for around ten percent of the average individual’s health status. What does account for a person’s health status is where they live, work, and play.

Community benefit spending, then, should focus on catalyzing place-based health improvement. While charity care must continue to be part of every organization’s community benefit strategy, healthcare delivery organizations should be strategically spending in the following areas related to place-based health improvement:

  • Advocacy
  • Convening
  • Programming
  • Investment

Accepting the determinants of health model demands an expanded definition of health. That expanded definition must include the concepts of social, mental, emotional and spiritual health to accompany the traditional definition of physical health. The expansion of this definition requires a reimagined approach to community health, particularly community health improvement.

There is no better beacon of community health than that of the hospital and the provider. At a macro level it’s imperative for the combined resources of the healthcare delivery system to provide the catalytic gusto to reframe the definition of health. On an individualized micro level, the healthcare system must begin, in earnest, connecting people to the places they live and the resources those places contain to support health and health improvement.

Hospitals and Community Benefit

We were discussing community benefit in class the other day. If you don’t know what community benefit is the Catholic Health Association’s website is a good place to start. This website goes more in depth. Basically (says Senator Grassley’s website) (it is my understanding that he started the look into community benefit in 2005) “providing community benefit is required for hospitals seeking and retaining tax-exempt status as charities.”

The CHA says community benefit includes the following:
-Charity care
-Government-sponsored indigent health care—unpaid costs of public programs (Medicaid, SCHIP, medically indigent programs)
-Community Benefit Services (I guess this is the extensive “other” category–dw)

And does not include the following:
-Bad debt
-Contractual allowances or quick-pay discounts
-Any portion of charity care costs already included in the subsidized health care services category
-Medicare shortfall (this can be included in other financial reports but not in a community benefit report)

But as far as I understand community benefit is not limited to just these broad categories…one of the issues is that exactly how to define community benefit is a matter of contention.

In 2005 there was a big uproar concerning the tax-exempt status of not-for-profit hospitals and whether or not they provide enough benefits to the communities they serve. Hospital associations around the country with the help of the aforementioned CHA quickly put together a reporting system to outline provided benefits. Some associations seem to be reporting an extensive amount of community benefit (I’m using CB from here on out).

The American Hospital Association deems the tax-exempt status of not-for-profit hospitals an “issue” but you have to be a member in order to access any releases (sorry, I’m on a student income and unable to afford such a luxury at this time so I can’t even summarize).

Since then, it has been rather quiet on the CB front. However, in July the IRS released an interim report (pdf) that apparently outlined a not-so-good effort by not-for-profit hospitals to provide CB. And most recently the IRS updated its Form 990 that not-for-profits use to claim their CB (side note: kind of ironic that a non-taxed entity submits forms to the government agency responsible for taxation. I guess someone has to watch over us…).

I’m sure this story hasn’t ended quite yet. CB is a very important function hospitals provide to the communities they serve. Hopefully the amount of CB provided won’t have to be mandated by the federal government…stay tuned.

Do you think hospitals currently provide sufficient community benefit (any examples)? What do you think is an appropriate policy for providing community benefit at our own system?