Do hospitals have a role in population health?

Population health advocates have identified health care providers, and hospitals in particular, as key allies in the effort to create better health and longer lives for Americans nationwide. Despite a growing interest in “community-based’ models of care, hospitals remain the most visible component of the US health care system. What’s more, hospitals are where the money, not to mention many of leading brains and cultural authority, reside. Of the 17.4% of GDP that the United States invests in health care, roughly 30% goes to hospitals – more than any other spending category. Hence why people interested in population health wish to have hospitals on board as they aim to address the always-challenging social, behavior and environmental determinants of health.

But the question remains open: do hospitals really have a role in the pursuit of population health? 

Plenty of rational people would argue that for now, the answer is no. Practically speaking, there are plenty of mission-critical challenges that may crowd out hospitals’ interest in population health. Controlling infection rates, boosting patient satisfaction scores and preparing for the potential of an Ebola case are all potentially competing concerns to building sidewalks, monitoring indoor air quality in public housing and redesigning school lunches. More conceptually, one might imagine that most hospitals have historically lacked a financial incentive to keep people healthy. Certainly in a fee-for-service financing model, less population health would have likely yielded more hospital services and potentially more hospital revenue. This landscape is shifting towards more value-based financing, but the transition is happening more slowly and in a more piecemeal fashion than many would hope.

On the other hand, there are some good reasons to think at least some hospitals have a significant role to play. Among the most significant may be that non-profit hospitals are required to meet the community benefit standard in order to secure their non-profit status and remain exempt from the federal income tax. Simply put, this standard has required non-profit hospitals to demonstrate an investment in the health and well-being of the local population in various forms since 1969.

To date, there has been little about community benefit spending that would inspire anyone to think population health is a priority. Usually, community benefit spending takes the form of some combination of charity care, health education or medical research. In fact, according to the work of BU health services researcher Gary Young, the majority of what most non-profit hospital report as their “community benefit” work amounts to writing off unpaid medical bills or providing charity care. So-called “community health-improvement services,” the kind of community benefit which population health advocates would see as the greatest leverage point, currently averages out to about 5%.

In an effort to respond to the lax standards around what counts and what doesn’t count as community benefit spending, policymakers incorporated new community benefit regulations into the ACA in 2012. Unfortunately, the new standards are short on clarity and stringency. The legislation requires non-profit hospitals “conduct a community health needs assessment” and “adopt an implementation plan” but clears up little to nothing of the existing ambiguity about how to meet the standard. Sara Rosenbaum and her colleagues at GWU describe details here. The authors submit that these new activities could provide a platform for public health activities – leaving open the more likely possibility, in my view, that they do little to nothing at all.

There remains no federal standard for the level of spending a tax-exempt hospital must direct to community benefit. Nor is there a guideline or rubric for how a hospital should divvy up its community benefit spending amongst the different buckets of “what counts.” Some states have taken the lead in this regard but they are still the minority. The Hilltop Institute offers an elegant tool for comparison here.

Even this kind of cursory analysis reveals the difficulty in answering the title question. Certainly, non-profit hospitals are intended to provide some kind of community benefit in exchange for the lucrative tax status they maintain. So one could imagine that conceptually, yes these hospitals do have a role to play insomuch as they are community institutions subsisting on public funds. But the requirements of the “community benefit” are so nebulous that they render the standard nearly meaningless. Certainly, proactive hospitals with energetic leadership have the latitude to pursue innovative population health projects and collaborations if they wish but many will not for the legitimate reasons outlined above.

In the end, lax legal frameworks relating to community benefit allow the role of hospitals to remain frustratingly undefined and hamper the development of a broad-based pursuit of population health within the US.