April 2016

April 2016

Is Your Board Involved in Community Benefit?

Has your hospital integrated oversight for community benefit into the Board governance structure and practices? Fulfilling the hospital’s mission to improve community health is directly tied to community benefit efforts. The Board should be attentive to how the hospital communicates the achievement of its mission to a variety of stakeholders. This can be accomplished by establishing a Board-level committee to provide oversight and policy guidance for all charitable services and activities supported by the hospital. The Board-level committee should include Board members, executive level staff and community stakeholders.
Telling the hospital’s story about improving community health can enable Board members to provide valuable insights and develop funds to support your programs through their connections in the community. Board involvement communicates the importance the Board places on community health issues and makes the Board more visible to the community.

Why is this important?

A heightened focus on hospital community benefit and community health needs assessment is requiring Boards to more fully integrate oversight for these activities into their governance structure and practices. The Federal Government has increased community benefit obligations of tax exempt hospitals as a result of the passage of the Affordable Care Act. The IRS is tasked with reporting and monitoring hospital community benefit and they report annually to Congress on hospital compliance. The IRS is focused on transparency for community benefit and many of the regulations reflect this priority. The IRS has indicated they will be more actively tracking and monitoring compliance and will impose penalties for non-compliance, up to and including the revocation of hospital tax exempt status. There are increased efforts by states and cities to challenge hospitals’ property tax exemption. Recent efforts in some states have resulted in hospitals losing state tax exemption and / or paying large fines. These hospitals were criticized for not investing enough in the community. In the current policy environment, it is increasingly important for Board members to be informed of community benefit expenses and programming on an ongoing basis.

Board Engagement Strategies

1. Include information on community benefit in the Board Orientation.
2. IRS regulations require the Board to review and approve the triennial CHNA and Implementation Strategy.
3. Create a Board-level committee to provide review and oversight of community benefit at a degree that is needed to ensure optimal quality and alignment with the needs of the local community.
4. Develop a committee charter and identify recommended competencies for committee members.
5. Establish a community benefit budget, or have target figures in each of the reportable community benefit categories.
6. Provide an annual written and in-person Board report to review community benefit activities.
7. Invite the community benefit committee members and Board members to visit community programs supported by the hospital. Set up an annual “field trip” to experience the programs and talk to the community residents helped by the programs.

More information and helpful resources on Governance and Leadership for community benefit can be found at: https://www.communitybenefitconnect.org/cb-3-0/governanceleadership/