Health and Taxes: Hospitals, Community Health and the IRS

61 Pages Posted: 7 Mar 2015 Last revised: 18 Mar 2021

See all articles by Mary Crossley

Mary Crossley

University of Pittsburgh - School of Law

Date Written: March 3, 2015


The Affordable Care Act created new conditions of federal tax exemption for nonprofit hospitals, including a requirement that hospitals conduct a community health needs assessment (CHNA) every three years to identify significant health needs in their communities and then to develop and implement a strategy responding to those needs. As a result, hospitals must now do more than provide charity care to their patients in exchange for the benefits of tax exemption, and the CHNA requirement has the potential both to prompt a radical change in hospitals’ relationship to their communities and to enlist hospitals as meaningful contributors to community health improvement initiatives. Final regulations issued in December 2014 clarify hospitals’ obligations under the CHNA requirement, but could do more to facilitate hospitals’ engagement in collaborative community health projects. The IRS has a rich opportunity, while hospitals are still learning to conduct CHNAs, to develop guidance establishing clear but flexible expectations for how they assess and address community needs. This Article urges the IRS to seize that opportunity by refining its regulatory framework for the CHNA requirement to more robustly promote transparency, accountability, community engagement, and collaboration, while simultaneously leaving hospitals a good degree of flexibility. By promoting alignment between hospitals’ regulatory compliance activities and broader community health improvement initiatives, the IRS could play a meaningful role in efforts to reorient our system towards promoting health and not simply treating illness.

Keywords: Affordable Care Act, ACA, Community Health Needs Assessment, CHNA requirement, federal tax law, nonprofit hospitals, tax exemption, tax law reform, population health, public health, social determinants of health

JEL Classification: E62, H51, I18, K32, K34, L31

Suggested Citation

Crossley, Mary, Health and Taxes: Hospitals, Community Health and the IRS (March 3, 2015). Yale Journal of Health Policy, Law, and Ethics, Vol. 15, p. 51, 2016, U. of Pittsburgh Legal Studies Research Paper No. 2015-05, Available at SSRN: or

Mary Crossley (Contact Author)

University of Pittsburgh - School of Law ( email )

3900 Forbes Ave.
Pittsburgh, PA 15260
United States
412-648-5300 (Phone)
412-648-2649 (Fax)


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