Innovative Finance Case Study: Hospital Community Benefit (HCB)

moneyThe disbursement of community benefit is a big business for nonprofit hospitals, which in 2011 spent an estimated $62 billion (an average of 7% total operating expenses) on programs, services, and subsidies in exchange for special tax-exempt status. The precision with which community benefit is defined has been a matter of debate. Historically, much of what hospitals reported had been charitable—or uncompensated—care. Congress, wanting greater accountability and transparency about how hospitals measure and monetize community benefit, enacted as part of the ACA in 2010 new standards for acceptable expenditures. Requirements for hospitals now include a Community Health Needs Assessment (CHNA) which must be done every three years and resulting implementation plan to address the identified needs.

The law has prompted new ways of thinking from hospitals now compelled to see themselves as partners in community health. This is a profound shift, said leading authority Sara Rosenbaum at a recent Hilltop Institute symposium on the topic, who reported that hospitals are now social actors in the community planning process. “What [the law] is saying to them is: you have to open your doors, look outside, and determine what is making your community sick, what would make it healthy, and what is your role in creating improvements.”

It’s commonsense then that hospitals across the country are investing in school-based health centers (SBHCs) as a way to fulfill their social benefit mandate.

Hospital Community Benefit and SBHCs: Henry Ford Health System, Detroit, Michigan

In 1991, Henry Ford Health System, located in southeast Michigan, began sponsoring SBHCs through their community benefit program. Today, HFHS supports 14 SBHCs throughout Detroit and surrounding areas. At the end of 2015, almost one quarter of the 14 SBHCs’ budgets came from community benefit dollars.

Henry Ford Health System spends about $300 million annually to meet their community benefit requirement. The 14 SBHCs sponsored by HFHS receive a total of four to six million, with some of the money coming directly from the community benefit program. Significant funding is also received through grants from the State of Michigan.

As Kathleen Conway, Director for the HFHS Department of Pediatrics, explained: “It was after I started reporting SBHCs in our HCB spending that the hospital administration really deepened its commitment to SBHCs, separate and apart from HCB.” The payoff for HFHS’ SBHCs has been substantial, and not just financially. The expanded partnership with HFHS allows the SBHCs to take advantage of the legal, administrative, and financial departments within HFHS, and increased access to other services and care coordination, all at no extra cost to the SBHC program. The hospital also found a variety of other private partners to support the SBHCs through monetary or in-kind support for expanded programs.

SBHCs: Time to be Opportunistic

The most recent census of SBHCs found little more than 100 hospitals currently engaged as partners in school-based clinical programs. That’s about three percent of all nonprofit hospitals. We SBHC advocates have much work to do toward building greater awareness about the model. It’s time to be opportunistic:

  • Use the community health needs assessment (CHNA) as a platform for outreach to build relationships with the benefit coordinator and respected members of the hospital administration where possible (these relationships can lead to inclusion in other working groups).
  • Demonstrate to the hospital leadership and to the community that the care provided in the SBHC is the same high quality care the child would receive at any of its traditional sites or outpatient clinics.
  • Take time to increase the institution’s knowledge of SBHCs and the direct contributions they make to improve health outcomes in the community.
  • Share SBHC data that link to challenging disparities in health outcomes, especially among children and adolescents disproportionately affected by resource inequities.

The value of a partnership between HCB and SBHCs may go beyond a potential revenue source. SBHC involvement in the CHNA or implementation process creates a pathway to new partnerships in the community, and the partnership with the hospital can often lead to in-kind, private, and operational support.

Extra Credit

Read “Health Policy Brief: Nonprofit Hospitals’ Community Benefit Requirements,” Health Affairs, February 25, 2016.

Read Sara Rosenbaum’s op-ed, Hospital community benefit spending: leaning in on the social determinants of health, in The Milbank Quarterly.


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