A new software program for measuring community benefits of hospitals has been developed by the Catholic Health Association and VHA, the Irving, Texas-based healthcare alliance.
For investor-owned hospitals, however, there is no specific line item for taxes paid, an area that isn't considered a community benefit by not-for-profit hospitals (See related stories, pages 51, 56). However, there is a section for hospitals to compare the value of tax exemptions with the dollar amount of community benefits.
In a joint effort by the CHA and VHA, the "Community Benefit Inventory for Social Accountability" is available this week for $750 to nonmembers and $450 for members.
"We expect there will be great interest (in the program), especially in states with outstanding tax-exemption challenges," said Julie Trocchio, the CHA's liaison of government relations.
Currently, more than 500 hospitals use the CHA or VHA software programs, which have been available independently since 1992 and 1993, respectively, spokesmen said. In addition, more than half the nation's 3,600 community hospitals have purchased the book format of the CHA and VHA community-benefit guidelines since 1989.
The consolidated CHA-VHA community benefit software program was designed by Lyon Software, the Sylvania, Ohio-based company that crafted the original VHA and CHA software versions.
In May, Lyon plans to release a Windows version of the program. Later this year, the 1996 version will be released that will address additional benefits suggested by integrated delivery systems and a section to help healthcare organizations coordinate community health needs with community benefits.
Over the past seven years, not-for-profit hospitals have been assessing community needs partly as a reaction to efforts by some state and local governments to require higher levels of community benefits to retain tax exemptions.
"We use (the VHA's guidelines) for service planning to measure progress in meeting our mission and to identify unmet needs in the community," said Patsy Matheny, director of community health improvement at Grant/Riverside Methodist Hospital, Columbus, Ohio. Grant/Riverside is an affiliate of eight-hospital U.S. Health Corp., Columbus, a VHA member.
Another reason some hospitals have been assessing community benefits is to respond to attacks from investor-owned Columbia/HCA Healthcare Corp. Over the past three years, Columbia has been comparing the provision of "community benefits" by not-for-profit hospitals and its own investor-owned hospitals in several markets.
The reports, which have been criticized by not-for-profit groups, have concluded that the majority of not-for-profits provide fewer community benefits than Columbia-owned hospitals and that the community benefits are less than the value of the not-for-profits' tax exemptions.
However, Columbia considers taxes paid a community benefit and subtracts unpaid taxes from not-for-profit hospitals' community-benefit totals. CHA and VHA officials said taxes paid are not direct community benefits and therefore do not include them in their benefit calculations.
The new CHA-VHA program incorporates one new feature that specifically addresses the taxation issue.
Not-for-profit hospitals now will be able to compare their potential tax burden with the dollar value of their community benefits, said Linda DeWolf, VHA's director of Community Health Improvement.
DeWolf downplayed the significance of the new feature, however, because it concentrates solely on dollar amounts.
"We are concerned....that the data generated by the community-benefit inventory not be used in isolation to define the community-benefit role of a healthcare organization," DeWolf said. "Numbers alone cannot convey the value of community services provided by CHA and VHA members."
For example, some community service activities may not cost much money, but they can lead to very real community health improvements, DeWolf said. Many hospitals work with local health departments and other community organizations to identify needs and coordinate health services, she said.
The joint CHA-VHA program includes the following as community benefits:
Costs, not charges, of charity care and bad debt.
Unpaid costs of public programs, or payment shortfalls of Medicaid, Medicare and other indigent-care programs. It also identifies "nonbilled services," which are services for which no individual patient bill exists.
Cash and in-kind donations made by the hospital to community agencies or to special funds used for charitable purposes. In addition, costs of educating and training health professionals and conducting research activities are included.
Low- or negative-margin health services that respond to a community need. Those services include burn units, neonatal intensive-care units, psychiatric facilities for homeless people, services for people with AIDS, hospice care and trauma services.