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Are You Ready for Your Annual IRS Evaluation?

Spring has sprung! After a long, cold winter in most parts of the US, the signs of spring are a welcome change. However, spring is also a signal that the end of the fiscal year is soon approaching. For many hospitals, the end of this fiscal year also means that you must “evaluate the impact” of your Community Health Needs Assessment (CHNA) implementation


Unfortunately, while the spirit of the IRS ruling is to use the CHNA process to move hospitals and health systems toward population-based health planning, the draft IRS guidelines are vague regarding the methods that must be used to perform such an evaluation. As a result, many hospitals and health systems are ill-prepared to measure outcomes, let alone conduct an evaluation of the impact. Moreover, many are unaware that this is even a requirement.

Answer the following questions to determine how prepared you are:

  1. Are you actively implementing all of the strategies and programs identified in your CHNA document?

  2. Do you have a mechanism in place to track, measure and report on the outcomes and impact of each of your implementation strategies and programs, beyond the number of people that attend or participate?

  3. Have you attempted to compile the measurement data that you are tracking for each implementation strategy and program and create a report that includes all of the data?

  4. Has your implementation team reviewed the compiled data to determine the extent to which your strategies and programs are achieving the intended results?

  5. If the answer to any of these above questions is no, do you have a plan to ensure that all of the above activities occur before July 1 (if your fiscal year ends on June 30)?

If the answer to any of these questions is NO, then you are probably not fully prepared to evaluate the impact of your CHNA implementation strategies. You can “catch up” by moving forward quickly to prepare for the end of the fiscal year by doing each of the following:

  1. Ensure that each of the implementation strategies and programs are currently being implemented. Check in with program leaders to determine if all strategies and programs identified in the CHNA are underway, if they are on schedule or not, and if there are any barriers to implementation. Some hospitals outlined strategies for new programs that required funding before implementation could begin, while others simply extended current community benefit programs. If implementation efforts are stalled for any reason, determine if barriers can be eliminated to ensure successful implementation.

  2. Establish outcome and impact measures. Many important community education, outreach and screening programs were designed as community benefit activities and only track the number of people who attend. This is an output measure. To establish outcomes and impact measures, hospitals and health systems must think creatively about what happens as a result of the program activities and set up a tracking system for the results, beyond what is typically tracked for 990 community benefit reporting. For example, one of our clients, Excela Health in Westmoreland County, PA, identified breast cancer as an important CHNA priority. Like many hospitals, they provide breast cancer education and screenings at health fairs. They enhanced this practice by having mammogram schedulers onsite to make appointments. They have several points in the process to measure impact. First, the number of women who attend a program or receive a screening is an output. Second, the numbers of women who schedule a mammogram and who complete a mammogram as a result of attending the program are outcomes. The number of women who were diagnosed with stage 0 or 1 breast cancer is an impact. Furthermore, the health system can quantify the financial impact of long-term cost savings associated with this early diagnosis. Figuring out how to track the women across the care system to document these outcomes and impacts is a data collection and reporting challenge. A “system” must be developed for the tracking and reporting of each of these pieces of data if the reporting mechanism does not already exist.

  3. Develop a quarterly (or semi-annual) progress report. Don’t wait until the end of the year to start to collect and put all of the data in one place in order to see what data you have and what still needs to be developed. Going through the exercise of attempting to develop a report will tell you a lot about what you have and what you need.

  4. Facilitate a discussion about what is working and not working. The word “evaluation” may be scary as there are no clear guidelines from the IRS regarding the methods to be used. However, just as with any quality improvement process, talking about what is working and not working and documenting your observations and next steps IS a form of program evaluation. At this point, the process can be as informal or as formal as you like, but we recommend documenting your assessment and recommended future action steps based on where you are now, regardless of how much (or how little) progress you have made so far.

Many of the processes that need to be put into place already exist in most hospitals within the clinical quality function, although we have not translated the thinking to apply to community outreach and benefit programs. Any delay in creating the outcomes measurement and evaluation process loses the opportunity to share successes and learn from failures. Such information is vital to your annual IRS 990 Schedule H. Being mindful of the upcoming requirements and asking for assistance if you need it will go a long way to help you document your outcomes and impact, and move your hospital toward effective population based health planning.

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