UPDATED SEPTEMBER 18, 2012
Sumption & Wyland, in association with Sage Project Consultants, has designed a comprehensive community health needs assessment process for nonprofit hospitals to comply with the new health care reform law requirements.
The following FAQ (frequently asked questions) sheet should serve as an introduction for hospital trustees and other leaders who are learning about community health needs assessments and the new legal requirements.
We have added some links to relevant documents if you wish to gather additional information and insights. Of course, we also invite you to contact Sumption & Wyland to discuss specific questions and concerns.
What Is a Community Health Needs Assessment?
A community health needs assessment (CHNA) is a process to identify, study, assess, and report on facts, attitudes, perceptions, and ideas about the current and future health of a community or area.
The process often involves a variety of community leaders and representatives who adapt the process to their community and supervise the work.
The work includes extensive research and data collection. There are many sources of healthcare-related data available to a community. These data serve as a starting point. In addition, focus groups, surveys, and individual interviews are used to fill in gaps and give the research a fuller, more accurate picture of the community.
Once the data analysis is performed, reports are drafted for internal (hospital) and external (community) use. These reports are used to identify community healthcare successes as well as needs, and often identify opportunities for a hospital to provide additional value to its community.
Why Do We Need to Do It?
The Patient Protection and Affordable Care Act of 2010 (otherwise known as ACA or health care reform) requires all hospitals that are charitable entities (nonprofit organizations under Section 501(c)3 of the Internal Revenue Code) to perform a community health needs assessment at least every three years. The assessments will be required to answer questions on a hospital’s annual Form 990 Federal tax return.
Hospitals that fail to conduct an assessment within the prescribed time (see below) must pay a $50,000 excise tax levied by the IRS. If a hospital continues to fail to perform a community health needs assessment, the $50,000 excise tax is levied annually until an assessment is completed.
When Do We Need to Do It?
[Our apologies for this description. Unfortunately, it's not easy to explain the deadline because it depends upon each hospital's fiscal/tax year.]
Every nonprofit hospital, whether independent or affiliated as part of a network, must complete their first assessment in the coming months. What does that mean? Here is the quote from IRS Notice 2011-52:
"Treasury and the IRS intend to require a hospital organization to conduct a CHNA and adopt an implementation strategy for each of its hospital facilities by the last day of its first taxable year beginning after March 23, 2012."
So, in theory, if a hospital’s taxable year began on March 24, it would have to file a Form 990 which includes a CHNA for the taxable year beginning March 24, 2012 and ending March 23, 2013. If a hospital’s tax year begins on March 23, it would have to file its first 990 with a CHNA for the taxable year beginning March 23, 2013 and ending March 22, 2014.
The two most common scenarios are for organizations with tax years that run January-December (calendar year) or July-June (the most common fiscal year). Calendar year filers would have to complete a CHNA by December 31, 2013. July-June fiscal year filers would have to complete a CHNA EARLIER – June 30, 2013. In the calendar year case, the first day of the next tax year after March 23, 2012 is January 1, 2013. In the July-June tax year case, the first day following March 23, 2012 is July 1, 2012.
Why Should We WANT to Do It?
We assume that all hospitals should desire to operate in compliance with Federal law. But the benefits only begin with compliance.
A community health needs assessment is an excellent market research opportunity for hospitals. Assessments can confirm current hospital initiatives and identify potential new market opportunities.
A community health needs assessment is an excellent marketing/branding opportunity. A hospital can advertise its leadership position in the community, promote its desire to be responsive to community needs and desires, and reinforce linkages with other organizations serving the healthcare and related needs of the community.
A well-done community health needs assessment helps identify the hospital as knowledgeable about its community and a trusted resource for guidance in healthcare practice and policy.
How to Get Started?
Our team has developed a comprehensive, yet flexible, approach to the community healthcare needs assessment process. We can work with your hospital’s leaders to educate them about the requirement and the opportunities. We can craft a research design, reporting format, and dissemination strategy that complies with Federal laws and regulations and also provides value to the hospital in its strategic, marketing, and business planning.
IRS Notice 2010-39 (PDF - 4 pages)
General IRS announcement of the provisions of the Patient Protection and Affordable Care Act of 2010 that are applicable to nonprofit hospitals and which are administered by the IRS.
IRS Notice 2011-52 (PDF - 28 pages)
Interim guidance from the IRS about how community health needs assessments should - and should not - be conducted so as to comply with applicable law (in place) and regulations (yet to be developed).
ACHI Community Health Assessment Toolkit (web site)
The Association for Community Health Improvement (ACHI), an affiliate of the American Hospital Association (AHA), has developed extensive resources related to community health needs assessments. Many of these resources predate the passage of the law and the IRS guidance referenced above. However, we believe that ACHI's resources are sound guidance for hospitals seeking to understand the needs assessment process.
CHNA Pitfalls to Avoid
Nonprofit hospitals, and those who advise them, are gearing up to prepare Community Health Needs Assessments (CHNAs) for filing with the IRS. Here are four mistaken beliefs about CHNAs that weaken the process and potentially harm nonprofit hospitals.
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