Assessing the Tax Impacts and Community Benefits of Nonprofit Hospitals with IMPLAN

Abstract

Nonprofit hospitals receive scrutiny regarding two interrelated issues: (1) the equity impacts of their tax-exempt status on the communities they serve and (2) the degree to which the community-benefit spending they offer serves local communities. Using economic impact analysis, the authors construct heuristic models that estimate the economic and tax benefits of nonprofit hospitals’ operations in four small and medium-sized metro regions. The estimates find that overall tax revenues disproportionately flow to state and federal levels of government, while the costs of tax exemptions disproportionately fall on local and regional levels of government. Additionally, forms of community benefit spending that are frequently criticized, such as uncompensated means-tested care, are found to be important forms of regional investment. The authors conclude by highlighting workforce development as a pathway to improving nonprofit hospitals’ community relationships.