Community benefit spending by nonprofit U.S. hospitals may be structurally discriminatory
The nonprofit hospital community benefit spending (CBS) program—a U.S. tax program offering breaks to nonprofit hospitals in exchange for initiatives and interventions that aim to promote the health of communities—may be structurally discriminatory, offering more funds to affluent, white communities, according to a new study led by researchers at Harvard T.H. Chan School of Public Health.
“Our findings raise substantial concern for structural discrimination in the nonprofit hospital tax system against communities with more racial and ethnic residents and low-income residents,” said corresponding author Jose Figueroa, associate professor of health policy and management.
The study was published February 28 in JAMA Health Forum.
Under the CBS program, nonprofit hospitals are exempted from paying certain taxes if they reallocate their foregone tax funds to a benefit for their communities. Examples of community benefits include financial assistance programs, subsidized care for underinsured populations, and local public health programs and interventions that address the social determinants of health.
Prior studies on the CBS program have found that nonprofit hospitals often return only a share of their tax-break money to their communities, which, in 2021, totaled $37.4 billion. But there’s been little research into equity within the program—how community benefit spending varies across communities according to their degrees of social vulnerability.
To address this question, the researchers used Internal Revenue Service tax filings from 2,465 nonprofit hospitals between 2018 and 2023. The hospitals served patients across 3,140 U.S. counties; the researchers also used data on each county’s racial, ethnic, and socioeconomic characteristics, including educational attainment, proportion of residents living in poverty (defined as below 138% of the federal poverty level), and Social Vulnerability Index score.
The study found that affluent communities, with higher household incomes, higher educational attainment, and more white residents, were allocated higher levels of CBS compared to socially vulnerable communities, with lower household incomes, lower educational attainment, and more Black and Latino residents. Communities in the highest quintile of allocated CBS tended to be affluent and received an average of $540 per capita; those in the lowest quintile tended to be socially vulnerable and received $22 per capita.
The researchers also calculated that for every 1% proportional increase in Black or Hispanic residents in a community, there was 1.6% and 0.88% less CBS per capita, respectively. For every 1% increase in the proportion of residents living in poverty, there was a nearly 2% decrease in CBS per capita, and for every 1% increase in the proportion of people who did not graduate from high school, there was a 4% decrease in CBS per capita.
According to the researchers, the study suggests that the nonprofit hospital tax system may be helping fuel health disparities across the U.S.
“Moving forward, policymakers should consider reforms or regulations to the current system that may yield a more equitable allocation of resources to communities that may need it the most,” Figueroa said.
Other Harvard Chan co-authors included David Blumenthal, professor of the practice of public health and health policy, and Dannie Dai, research assistant, and Jessica Phelan, assistant director of analytics, both members of the Healthcare Quality and Outcomes Lab.
