Boston, MA, September 13, 2007.  Consumer groups from across the country, led by Community Catalyst, a national consumer health advocacy organization, are calling for tax-exempt hospitals to be held more responsible for reporting on and providing care to un- and underinsured individuals.  Hospitals seeking and retaining tax-exempt status as charities are required to provide community benefits.

The coalition of organizations issued comments to the Internal Revenue Service (IRS) today citing the importance of the new reporting requirements for nonprofit institutions, but also urging additional transparency so that the public can fully understand whether nonprofit hospitals are living up to the high standards their tax-exempt status merits.  The comments were in response to the IRS proposed redesign of Form 990, which is filed annually by nonprofit institutions, and the introduction of a new “Schedule H” to be completed by hospitals. 

“Nonprofit hospitals receive enormous advantages through tax breaks, and we believe that those health care institutions should be clear to the community about the specific financial assistance programs and community benefits provided in exchange for these significant tax benefits,” said Susan T. Sherry, Deputy Director of Community Catalyst.  “While there are exemplary hospitals with strong charity care and community service programs all across the country, we have seen far too many other tax-exempt hospitals fall short in serving the most pressing health care needs of their communities without consequence to their tax-exempt status.” 

In their letter to the IRS, Community Catalyst and twenty other consumer organizations emphasized the importance of adequate charity care policies, including fair and open eligibility and collection procedures.  While acknowledging the reporting improvements the IRS has already proposed to the tax Form 990 the groups called for more detailed disclosure of charity care policies and eligibility criteria and supported expanded financial transparency and reporting of billing and collections information.  These are key factors in determining whether a hospital is fulfilling its obligations as a tax-exempt organization.

“It’s our experience that nonprofit hospitals are all over the map in how they determine eligibility for free care, how they inform patients about payment options, what’s considered a community benefit, and how they report these benefits or charity care,” Sherry said.  “It’s the Wild West out there.  Better 990 reporting standards are a first step to taming this.”

Citing a recently released Discussion Draft on Tax Exempt Hospitals from Senator Chuck Grassley’s (R-IA) office and an interim report of the IRS’s Hospital Compliance Project issued in July, consumer groups also underscored that reporting alone does not improve care.  Instead, the groups contend, more defined community benefit benchmarks must be established.

“We need common terms and measurements so taxpayers can have confidence that nonprofit hospitals are providing benefits commensurate with the billions of dollars in tax breaks they receive every year.  Some hospitals reported that they do little to nothing to inform or promote charity care policies to their patients. These policies shouldn’t be hidden.  They should be in the light for all to know and see,” Grassley said.  “It’s important that organizations such as Community Catalyst that advocate for working families make their voices heard.  These groups understand health care needs in their communities.  The IRS and Congress need to listen closely.”

View the complete comments submitted to the IRS.

About Community Catalyst
Community Catalyst is a national non-profit advocacy organization dedicated to quality affordable health care for all.  Since 1997, Community Catalyst has been working to build the consumer and community leadership required to transform the American health system.  With the belief that this transformation will happen when consumers are fully engaged and have an organized voice, Community Catalyst works in partnership with national, state and local consumer organizations, policymakers, and foundations, providing leadership and support to change the health care system so it serves everyone—especially vulnerable members of society.  For more information, visit