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Nonprofit Hospital and Health System Charitable Spending on Housing As a Social Determinant of Health

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Nonprofit Hospital and Health System Charitable Spending on Housing As a Social Determinant of Health New Prescriptions? Nonprofit Hospital and Health System Charitable Spending on Housing as a Social Determinant of Health by Carl Hedman B.A. Economics Reed College, 2013 SUBMITTED TO THE DEPARTMENT OF URBAN STUDIES AND PLANNING IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER IN CITY PLANNING AT THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY MAY 2020 ©2020 Carl Hedman. All rights reserved. The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part in any medium now known or hereafter created. Signature of Author:_____________________________________________________________ Department of Urban Studies and Planning May 19, 2020 Certified by:___________________________________________________________________ Justin Steil Associate Professor of Law and Urban Planning Department of Urban Studies and Planning Accepted by:__________________________________________________________________ Ceasar McDowell Professor of the Practice Chair, MCP Committee Thesis Supervisor Department of Urban Studies and Planning 2 New Prescriptions? Nonprofit Hospital and Health System Charitable Spending on Housing as a Social Determinant of Health by Carl Hedman Submitted to the Department of Urban Studies and Planning on May 19, 2020 in Partial Fulfillment of the Requirements for the Degree of Master in City Planning ABSTRACT There is an emerging consensus that socioeconomic, environmental, and structural factors—known as the social determinants of health (SDOH)—are stronger drivers of health outcomes than genetics or clinical care. In particular, health researchers have elevated housing stability, quality, and affordability as critical SDOH. As focus in public health shifts towards addressing SDOH, attention has turned to the role of hospitals—particularly those with nonprofit status—in improving local housing conditions. To maintain federal tax exemption, nonprofit hospitals and health systems must annually report charitable practices, known as “community benefits,” to the Internal Revenue Service (IRS). Recent changes in IRS reporting requirements, coinciding with federal and state healthcare overhauls, encourage hospitals to make local charitable investments to address SDOH, including housing. Following the regulatory changes and increased recognition of the SDOH, this thesis has two primary aims. First, utilizing processed IRS Form 990 Schedule H annual hospital filings from 2010-2017, I conduct a descriptive analysis to assess geographic and temporal variations in charitable practices across the United States. Second, relying on demographic data summarized at the ZIP Code level, I employ regression techniques to analyze whether the socioeconomic characteristics of an institution’s immediate vicinity explain variations in charitable spending on housing and other SDOH activities. I do not find evidence of widespread shifts in community benefit practices to address SDOH. These expenses were minimal and declined relative to other charitable practices from 2010-2017. Results indicate that local characteristics do explain differences in charitable spending: institutions located in communities with higher poverty and less affordable housing options are more likely to report spending on housing and other SDOH activities. However, stronger unobserved factors are likely driving variations in this spending. These findings suggest limitations of the current community benefits standard for increasing charitable expenditures on housing and other SDOH activities. Thesis Supervisor: Justin Steil Title: Associate Professor of Law and Urban Planning 3 Acknowledgements This work would not be possible without the dedication and generous guidance of my advisor, Justin Steil, who remained steadfast in his commitment to this project throughout a semester defined by unprecedented challenges and, thankfully, glimmers of hope. Welcome to the world, Camilo! I want to extend my sincerest gratitude to my reader, Megan Sandel, whose comments and wisdom were instrumental in shaping this thesis. Your commitment to bridging housing and health justice remains a continuing source of inspiration. Thank you to Dr. Thea James, Alyia Gaskins, Eva Allen, Casey Brock, and Dr. Giridhar Mallya for generously offering your time and insights to help inform this research. I am deeply indebted to Jessica Boatright for her unwavering mentorship, support, and encouragement this last year. Thank you, Jessica, Chris, Gail and the rest of the NHD family, for making DND feel like a second home. Dina, thank you for the late-night edits, the Polar, the ragù, the support, the Hulu, and, generally, for helping me stay sane these last few months. Thank you to my DUSP family for the conversations after class, the late nights in CRON, the Friday hangs, and, more recently, the Zoom backgrounds. I have learned and grown so much these past two years. I can’t wait to see you all again IRL. Finally, thank you to my family—Mom, Dad, and Ian—for your unwavering love and support throughout the years. None of this would have been possible without you. 4 Table of Contents 1. Executive Summary ...................................................................................................................................... 7 2. Health, Housing, and Hospital Investment ............................................................................................. 11 2.1 The Social and Structural Determinants of Health .......................................................................... 11 2.2 Health and Housing............................................................................................................................... 12 2.3 Hospital Investment in Housing ......................................................................................................... 14 2.4 Motivations, Barriers, and Support .................................................................................................... 17 2.5 Conclusion ............................................................................................................................................. 20 3. Hospital Ownership, Taxes and Community Benefits .......................................................................... 21 3.1 Hospital Ownership .............................................................................................................................. 21 3.2 Federal Tax Exemption and Community Benefits ........................................................................... 23 3.3 ACA, CHNA and CHIP .......................................................................................................................... 31 3.4 State and Local Tax Exemption ........................................................................................................... 33 3.5 Community Benefit and Community Building Activities Analysis .............................................. 36 3.6 Conclusion ............................................................................................................................................. 37 4. Data description .......................................................................................................................................... 38 4.1 IRS Form 990 and Schedule H ............................................................................................................. 38 4.2 American Community Survey Data ................................................................................................... 42 4.3 State Hospital Regulations ................................................................................................................... 43 4.4 Rural-Urban Continuum Classification ............................................................................................ 43 5. Analysis: Spatial and Temporal Descriptive Results ............................................................................ 45 5.1 Revenue and Profit ............................................................................................................................... 45 5.2 Community Benefits ............................................................................................................................ 46 5.3 Community Building Activities .......................................................................................................... 49 5.4 Community Building Activities: Physical Improvements and Housing ....................................... 55 6. Analysis: Community Characteristics and Chartable Spending ......................................................... 60 6.1 Analysis Approach ................................................................................................................................ 60 6.2 Decile Analysis ...................................................................................................................................... 61 6.3 Linear Regression ................................................................................................................................. 66 7. Discussion .................................................................................................................................................... 74 7.1 Community Benefit and Community Building Activity Spending Trends .................................. 74 5 7.2 Spatial Characteristics and Charitable Spending ............................................................................
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