Pennsylvania
Minimum Community Benefit Requirement
Pennsylvania law permits most nonprofit hospitals to choose from among seven alternative community benefit standards in order to qualify as a tax-exempt “institution of purely public charity.” Six of these standards specify a minimum level of community benefits.

Pennsylvania’s Institutions of Purely Public Charity Act requires that in order to be deemed an “institution of purely public charity,” a hospital must do all of the following: advance a charitable purpose, operate free from any private profit motive, donate a substantial portion of its services to benefit the community, “benefit a substantial and indefinite class of persons who are legitimate subjects of charity,” and relieve government of some of its burden. 10 Pa. Stat. §375 (a)-(f).

To fulfill the requirement of §375(d)(1) that a hospital “donate or render gratuitously a substantial portion of its services to benefit the community,” a hospital must satisfy one of seven standards. Six of these seven standards specify a minimum level of community benefits.
  1. Providing goods or services to all who seek them without regard of their ability to pay if the institution a) has a written policy to this effect, b) has published this in a reasonable manner, and c) provides these uncompensated goods or services equal to at least 75% of net operating income, but not less than 3% of total operating expenses. 10 Pa. Stat. §375(d)(1)(i)(C).
  2. Providing goods or services that are based upon the recipient’s ability to pay if a) the institution can demonstration implementation of a written policy and fee schedule based on individual or family income, b) at least 20% of the individuals receiving these goods or services pay no fee or a fee which is lower than the cost of the goods or services, c) at least 10% of the individuals receiving the goods or services receive a reduction in fees of at least 10% of the cost of the goods or services provided to them, and d) no individual pays a fee which is greater than or equal to the cost of the goods or services. 10 Pa. Stat. §375(d)(1)(ii)(B)-(D).
  3. Providing wholly gratuitous goods or services to at least 5% of those receiving similar goods or services from the institution. 10 Pa. Stat. §375(d)(1)(iii).
  4. Providing financial assistance or uncompensated goods or services to at least 20% of those receiving similar goods or services if at least 10% either paid no fees or paid fees accounting for 90% or less than the cost of the goods or services. 10 Pa. Stat. §375(d)(1)(iv).
  5. Providing uncompensated goods or services which in the aggregate equal at least 5% of the institution’s cost of providing the goods or services. 10 Pa. Stat. §375(d)(1)(v).
  6. Providing goods or services at no fee or reduced fees to government agencies or goods or services to individuals eligible for government programs if any one of the following applies:
    1. The institution receives 75% or more of its gross operating revenue from grants or fee-for-service payments by government agencies and if the aggregate amount of government agency fee-for-service payments does not exceed 95% of the institution’s costs for providing goods or services to the individuals for whom the fee for services payments are made. 10 Pa. Stat. §375(d)(1)(vi).
    2. This alternative (which does not specify a minimum level of community benefits) does not apply to nonprofit general hospitals.
  7. Providing fundraising on behalf of (or grants to) an institution of purely public charity. 10 Pa. Stat. §375(d)(1)(vii). (This standard does not specify a minimum level of community benefit.)