The Accountability of Nonprofit Hospitals

Nonprofit hospitals in Maryland experienced an adjustment period of roughly two years when given new requirements for reporting “community benefits.” A reliable system for comparing community benefits between hospitals will require further standardization.

Since 2001, nonprofit hospitals in Maryland have been reporting community benefits, hospital activities that justify nonprofit status, using a set of categories similar to the Internal Revenue Service’s (IRS) Schedule H. Maryland’s experience will likely be instructive to hospitals filing the new Schedule H report in 2010. This paper describes how Maryland’s nonprofit hospitals responded to new reporting requirements. Research included interviews with senior executives at 20 of Maryland’s nonprofit hospitals. The interviews addressed 10 aspects of organizational planning that indicated a managerial approach to community benefits.

Key Findings:

  • Maryland’s Health Services Cost Review Committee (HSCRC) played a key role in educating hospitals about new requirements.
  • While hospitals made necessary adjustments to new reporting requirements, officials experienced persistent uncertainty about how to classify community benefits.
  • Most hospitals in Maryland approached community benefits from a perspective that mixed accounting and managerial practices.

The study concluded that nonprofit hospitals may experience a significant learning curve adjusting to new requirements for the reporting of community benefits. Maryland’s experience with community benefit reporting will likely be instructive to hospitals filing the new Schedule H in 2010.