February 12, 2009
IRS issues final report on study of nonprofit hospitals' community benefits and compensation
The IRS released the final report on its study of tax-exempt hospitals, along with an executive summary and a handy Table of Contents with links to each section. The report examined the responses of almost 500 hospitals to an IRS's questionnaire about the community benefits, the legal basis of their tax-exempt status. The surveyed hospitals spent an average of 9% and median of 6% of total revenues on community benefits. In non-research hospitals, an average of 71% of community benefit consisted of uncompensated care. majority of this in uncompensated care (except in research hospitals). A relatively small number of hospitals (9%) provided the bulk of uncompensated care (63%).
The report also examined a group of 20 hospitals regarding their executive compensation practices and policies. Nearly all the hospitals set compensation amounts by following procedures that created a rebuttable presumption of reasonableness (and safe harbor), and the actual amounts awarded were deemed "within the range of reasonable compensation."
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