Community Benefit Requirement
California requires nonprofit hospitals to provide community benefits.

California law expressly recognizes that nonprofit hospitals receive “favorable tax treatment by the government… [i]n exchange [for assuming] a social obligation to provide community benefits …” Cal. Health & Safety Code 127340(a). California defines “community benefit” as hospital activity “intended to address community needs and priorities primarily through disease prevention and improvement of health status.” The statute lists, as non-exclusive examples of community benefit, the unreimbursed costs of providing health care services to vulnerable populations (including both Medicaid and Medicare shortfall); medical research; health professions education; adult day care; child care; sponsoring food, shelter, and clothing for the homeless; support of public health programs; contributions to a community priority; health care cost containment; enhancing access to care; and education, transportation, and other goods or services that help maintain a person’s health. Cal. Health & Safety Code §127345(c).

In addition, California’s certificate of need (CON) law exempts from certain specified CON requirements a health care project proposed by a hospital that agrees to provide free health care services to indigents, over a five year period, equivalent in dollar value to that of the proposed health care project. Cal. Health & Safety Code §127190.