If they aren't there already, community benefit reporting laws may be coming to a state near you.
The heads-up to not-for-profit providers comes in a new report from the Coalition for Nonprofit Health Care, a Washington-based advocacy group of 30 healthcare organizations. The coalition supports the not-for-profit sector of healthcare.
The report chronicles community efforts to keeps tabs on what healthcare organizations are doing for their communities in exchange for their tax exemptions. It looks at eight states that have enacted community benefit reporting laws since 1990. Such laws came into vogue with the diversification of not-for-profit hospital systems into for-profit businesses and the growth of for-profit hospital chains, which questioned the preferential tax treatment of their not-for-profit competitors.
T.J. Sullivan, the coalition's general counsel, said the issue of community benefit reporting laws usually arises for one of two reasons: Local governments want to narrow the kinds of property that qualify for exemptions, or not-for-profits want to clarify the standards they must meet for exemptions.
The first state to enact such a law was New York, followed by California, Idaho, Indiana, Pennsylvania, Texas and Utah. Massachusetts has a voluntary initiative.
"The states' approaches differ, as do their motivations, but all address the concept of community benefit," the report said.
These laws differ, but they fall mainly into two categories:
* Benefit planning and reporting laws, which typically require a needs assessment and a detailed plan for meeting the community's health needs.
* Minimum expenditure laws, which require a set level of spending on community benefits to qualify for local tax-exempt status.
Five states have benefit planning and reporting laws, and three have minimum expenditure requirements. Texas has benefit planning and minimum community benefit spending requirements.
Laws that set spending requirements seem to be less effective than those that rely on benefit planning and reporting.
"By focusing narrowly on how much to provide, rather than on the more crucial aspects of what to provide and how to provide it, these laws are inherently less well suited to ensuring social accountability," the report said.