Colorado leaders want to make hospital community benefit distribution more representative of the community

By

Boram Kim

|

On Wednesday, the Colorado House Public and Behavioral Health and Human Services Committee approved a measure that would restructure the state’s hospital community benefit system. 

Federal tax law requires nonprofit hospital organizations to spend a portion of their surplus revenue each year on community benefits, which are goods and services that address community needs, in order to stay exempt from paying federal income taxes. 

House Bill 1243 would require hospitals to engage the communities they directly serve and submit a public report on how this spending will be administered to meet local health needs. 

State law requires nonprofit, tax-exempt general hospitals to solicit community input and complete a community health needs assessment every three years. The bill’s sponsor, Rep. Judy Amabile (D-Boulder), said those assessments revealed an opportunity for improvement. 

“The broad hospital reporting categories are too general to help the community or the state understand exactly what each hospital does with those investments,” Amabile said. “Using the general categories reported, there seems to be a misalignment between community health needs and community health investments. So [hospitals] did this work but they still don’t line up between what the community said they wanted and where the investments got made.”

The Colorado Hospital Association (CHA) reported Colorado hospitals invested $1.9 billion, 11.9% of their total expenses, toward community benefits in 2021, which far exceeded the national average of 9.7%. CHA took an “opposed unless amended” position, testifying with other hospital representatives on the investments being made along with their concerns over the bill. 

“We are firmly opposed to the bill as introduced and the reason is pretty simple,” testified CHA Vice President of Legislative Affairs Josh Ewing. “As introduced, the bill would have required an additional $492 million in spending on community benefits. And the main reason for that is that it would have set a minimum threshold and defined community benefit in a way that said everything that counts as community benefit at the federal level no longer counts at the state level … We would strongly urge you to support the amendments today because we do believe in the community benefit investments and believe there’s always room for improvement.”

The amended version of the bill, which was introduced and adopted during the hearing, would authorize the Department of Health Care Policy and Financing (HCPF) to include a summary of hospital tax exemptions in its annual report, establish a minimum annual community investment target, set community benefit requirements for compliance, and take remedial action if a hospital fails to comply. HCPF helped develop the amendments that were adopted prior to the bill’s approval. 

HCPF Executive Director Kim Bimestefer testified in support of the measure, saying it would improve community benefit accountability and effectiveness. 

“I want to underscore why [community feedback is] so important,” Bimestefer said. “It’s the community that actually funds the revenue of where these monies come from and these hospitals are tax exempt. So the community is the one that has to deal with the fact that the biggest industry, which is healthcare in the state and the nation, about 18% of our GDP—the biggest part of that is hospitals … [who] don’t pay taxes, so the same community has less tax revenues coming in.

So [HB 1243] makes sense because these [hospital] dollars are in lieu of taxes [and] the community should have a pretty big say in where these monies are going.”

Because federal requirements do not cover the accounting and minimum thresholds for spending, the department said there was little to align community and hospital interests and ensure those needs are met without a detailed reporting requirement.

Colorado’s most recent community health needs assessment found 95% of respondents indicated behavioral health as a top priority. Another survey found that nearly half of Denver County residents witnessed a decline in mental health in 2021, compared to 38% statewide. 

The state has been working to address gaps in behavioral health access, releasing its strategic plan in February and introducing several bills this session. HCPF began accepting applications for the state’s new Integrated Behavioral Health Grant Program last week, designed to support the expansion of integrated behavioral health programming in Colorado through short-term grant funding to providers. 

HCPF and other bill advocates said more accountability is needed for hospital benefits to ensure the investment goes where it is needed. 

The Colorado Organization for Latina Opportunity and Reproductive Rights (COLOR) took the first and largest poll of Latinos in Colorado in 2022, which was outlined in its Colorado Latino Policy Agenda. Mar Galvez, policy associate for COLOR, told committee members that hospitals were not prioritizing the needs of their community. 

“We asked the Latino community in Colorado what issues matter to them and we found that 78% of respondents support increasing access to healthcare,” Galvez said. “For example, we asked other questions about their overall view of how well [the] Colorado mental healthcare system meets the needs of Latinos—52% of respondents said that some fundamental changes are needed to make it work better for the Latino community. But 23% felt that it needed to be completely rebuilt to better serve the Hispanic or Latino community.

And I say this to highlight how it’s important that our community is able to voice their needs and advocate for themselves in order for our needs to be prioritized.”

In a separate statement to State of Reform, COLOR said it does not directly engage with hospitals in its work, but instead partners with HCPF and other healthcare leaders in policy implementation that could disproportionately impact the Latino community if not done properly. 

“We have heard from many of our community members that they sometimes fear going to a hospital due to their documentation status and/or not being able to speak in the language of their choosing with a medical professional,” the statement read.

“Investments are not just financial, they can also be measured with time and compassion. Our community wants to be able to trust facilities that many times turn a blind eye to their needs, and they also want to be able to afford care. There are no healthy communities if there are no healthy and compassionate options that all people can have access to.”

The bill is scheduled for consideration on the House floor.