Robert Libal

Minnesota has 141 non-profit healthcare organizations that receive federal and state tax exemptions and must report community benefit expenses through IRS form 990 as mandated by Affordable Care Act of 2010. This research compares community benefits and tax exemptions for hospitals in Minnesota. Primary spending categories are evaluated over the last 6 years. To evaluate hospitals equitably, we exempted critical access hospitals that have low operating incomes. We found the community benefit expense reported on the 990s and compared it to an estimated tax exemption to evaluate the implications of the tax exclusion. In addition, changes in expense classifications were analyzed. In the 38 hospitals studied, 25 had at least one file year where the estimated tax exemption was more than the community benefit expense. Additionally, over 6 years, Medicaid underpayments were the leading expense category in the community benefit calculation, comprising at least 40% of total reported benefit expenses each year. We can conclude that some hospitals are not spending the adequate amount from their tax exemption on community benefit programs and of the hospitals that are, the primary expense category comes from underpayments in Medicaid.