For the first time in more than a quarter of a century, the IRS has issued a major redesign of the Form 990, the primary form that not-for-profit organizations must file to demonstrate that they are meeting their obligations as charitable organizations as defined by the IRS.

It is critical to remember that an organization’s board must review and approve the Form 990 before submitting it to the IRS. Upon filing, the form becomes public information.

As part of meeting this requirement, not-for-profit organizations must complete community health needs assessment (CHNA) at least once every three years, as stipulated in IRS Notice 2011-52.   (This requirement is effective for tax years beginning after March 23, 2012.)   

The CHNA ideally should be regarded as more than just a tool to demonstrate compliance. A hospital’s efforts to meet this requirement should not be driven by the fear of being audited by the IRS, nor should hospitals be consumed with concern about being held up in protracted court battles, as was the case with Provena Covenant Medical Center in Urbana, Ill., or being painted as a money-grubbing hospital, as Houston-based M.D. Anderson was portrayed in a recent article in The Wall Street Journal (Martinez, B., “Cash Before Chemo: Hospitals Get Tough,” April 28, 2008).   

Rather, not-for-profit hospitals should approach the Form 990 and CHNA requirements in a way that not only meets the IRS’s compliance requirements of the IRS but also seeks to genuinely enhance the health of the communities that they serve.   

The question then remains:How should a hospital conduct a community health needs assessment?Based upon a review of the IRS Form 990, the requirements for completing the section titled Community Health Needs Assessment are as follows.   

The hospital first must attest to whether it conducted a CHNA during the tax year or either of the two immediately preceding tax years. If the hospital indicates that it has done so, it then must provide an assurance that its CHNA report describes each of the following:

  • A definition of the community served by the hospital facility
  • Demographics of the community 
  • Existing healthcare facilities and resources within the community that are available to respond to the health needs of the community 
  • The method used to obtain the data 
  • The health needs of the community 
  • Primary and chronic disease needs and other health issues of uninsured persons, low-income person, and minority groups 
  • The process of identifying and prioritizing community health needs and services to meet the community health needs 
  • The process for consulting with persons representing the community’s interests 
  • Information gaps that limit the hospital facility’s ability to assess the community’s health needs.    

Furthermore, in its Part VI (Supplemental Information), the Form 990 requires the following:

  • Descriptions pointing to specific sections of Form 990 
  • A needs assessment, in which the hospital describes how it assesses the healthcare needs of the communities it serves, in addition to any needs assessments reported in the form’s Part V, Section B 
  • A description of how the organization informs and educates patients and persons who may be billed for patient care about their eligibility for assistance under federal, state, or local government programs or under the organization’s financial assistance policy 
  • A description of the community the organization serves, taking into account the geographic area and demographic constituents it serves 
  • Any additional information important to describing how the organization’s hospital or other healthcare facilities further its exempt purpose by promoting the health of the community (e.g., open medical staff, community board, use of surplus funds, etc.)

Moreover, if the organization is part of an affiliated healthcare system, it must describe the respective roles of the organization and its affiliates in promoting the health of the communities served. And, if applicable, it must identify all states with which the organization, or a related organization, files a community benefit report.   

As a final requirement in this section, the organization must identify its facility reporting group or groups.    

Under Part V, the hospital also must attest to whether it has made the CHNA report widely available to the public. If the hospital indicates that it has done so,it must then indicate where the report can be accessed, be it through the hospital facility’s website, a request from the hospital facility, or some other means, which must be described in Part VI.   

If the reporting hospital addressed needs identified in its most recently conducted CHNA, then it most provide details of the process it used. The form requests that the hospital indicate whether its efforts included the following steps:

  • Adoption of an implementation strategy that addresses each of the community health needs identified through the CHNA 
  • Execution of the implementation strategy 
  • Participation in the development of a communitywide plan 
  • Participation in the execution of a communitywide plan 
  • Inclusion of a community benefits section in operational plans 
  • Adoption of a budget for provision of services that addresses the needs identified in the CHNA 
  • Prioritization of health needs in its community 
  • Prioritization of services that the hospital facility will undertake to meet health needs in its community 
  • Other steps, which the hospitals is requested to describe in Part VI.    

These steps may be seen as being, in many ways, straightforward. Yetit bears emphasizing that the CHNA should be viewed as more than simply an exercise in ticking off boxes and filing supplemental information to protect the organization from scrutiny by the IRS and other stakeholders. The Form 999, Schedule H, if viewed as a population health improvement tool, offers a means for an organization to self-assess the extent to which it has a robust community health intervention plan that meets sufficient rigor to move toward the realization of community health goals and targets.    

In short, a hospital’s efforts to complete the CHNA should reach out and draw upon diverse gifts and talents of its multidisciplinary and multisector team in a way that reflects the true spirit of collaborative planning, collective responsibility, and mutual accountability for the health and well-being of the communities an organization serves by. This collaborative approach would involve partnerships with local public health departments, local schools and colleges (particularly with those with programs in community health), and even competitors, where there is an explicit agreement to cooperate on a community and regional basis with respect to some areas of focus while maintaining competition in other arenas.


Marty Martin, PsyD, is director and associate professor, Health Sector Management, Driehaus School of Business, DePaul University, Chicago, and a member of HFMA’s First Illinois Chapter (martym@depaul.edu). 


For more information, see Marty Martin's "Community Benefit: Beyond Health Fairs and Form 990," hfm, January, 2013.

Publication Date: Tuesday, January 01, 2013

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