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InDepth: A flaw in Form 990 Schedule H can render a key metric useless

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How a flaw in the IRS Form 990 Schedule H can render a key metric useless

A Modern Healthcare analysis of Schedule H in more than 1,500 Internal Revenue Service Form 990s found inconsistencies or errors in the section providers use to report the percentage of their expenses used for community benefit, even though in most instances they were following IRS' instructions.

In about 5% of the forms examined, the Schedule H did not accurately represent how much of a provider's expenses went to benefit the community.

The flaw in Schedule H

While the example above at least reports the negative community benefit, in other instances the net community benefit was left blank.

Check selected hospitals' community benefit calculations

Modern Healthcare calculated the net community benefit and the benefit as a percentage of total expenses for more than 1,500 hospitals in California, Florida, Illinois, New York and Texas as a demonstration of the problem. We then compared the calculated results with the values reported in Schedule H, Line 7 to identify hospitals with a 990 that calculated net negative community benefit.

How we analyzed the data

Modern Healthcare used data from Community Benefit Insight to download and examine Internal Revenue Service Form 990s for individual hospitals from California, Florida, Illinois, New York and Texas, which can be found in the tool above. Examined were close to 2,100 Form 990s downloaded from the IRS site. Of those, close to 1,600 Form 990s were for single hospitals for 2013 through 2017 tax years. Two additional hospitals where net community benefits could not reliably be calculated with the information given were excluded.

For a separate analysis of about 400 Form 990s for Illinois hospitals, some information was entered by hand from PDFs obtained through Guidestar, while ProPublica's Nonprofit Explorer was used to check calculations.



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