Well Sourced: IRS files help you X-ray health care finances

Note: Portions of this post were adapted from a tipsheet created with input – and in some cases exact phrasing – from Charles Ornstein when he was at the Los Angeles Times. Thank you, Charlie!

Even with all the changes in the healthcare landscape over the past few decades, there are still more not-for-profit hospitals in the U.S. than profit-driven organizations or government-run hospitals.

There also are thousands of charitable organizations and other nonprofit groups in the health care arena.

Unlike a government-run health care agency, there aren’t always public meetings for you to attend or public records for you to get access to with any ease.

The one paper window you can nearly guarantee will be there for nonprofits is the Internal Revenue Service Form 990.

SOURCE: U.S. Internal Revenue Service at www.irs.gov

WHAT IT DOES: Gathers financial reports from nonprofits, including hospitals.

WHAT IT DOES NOT DO: Provide clear trends in financial performance or effectiveness.

RECORDS: Form 990s, filed by any federally tax-exempt organization. These can give you a detailed breakdown of hospital and health care nonprofit costs and revenues. They also will show you who the top paid executives are. They are self-reported, and some organizations are more forthcoming than others. The IRS can give you 990s going back several decades. The quickest source for current 990s is Guidestar, a nonprofit website that also files a 990. Also, nonprofits are supposed to provide three years’ worth of 990s upon request.

Or, you can let ProPublica do some of the work for you. The nonprofit news organization – which also files a 990 – took 990s from over 1.2 million tax returns filed by tax-exempt organizations and created the Nonprofit Explorer database that allows anyone to examine the finances of organizations, including executive pay, revenues, and expenses. You can download the individual 990s from the search results page.

If you really want to go big, you can download massive amounts of 990 files all at once from Public Resource by year and month. Or you can download a full year’s worth of 990 data from the IRS itself.

DRAWBACKS: The information can sometimes lag by more than two years.

EXAMPLE: In 2011, Elkhart General Hospital in Elkhart, Indiana, made big cuts in its staff. Tim Vandenack at The Elkhart Truth – one of the all-time great newspaper names – dug into the hospital’s finances with other reporters at the paper and published a breakdown of the hospitals expenses and revenues for the previous two years, showing that the hospital had barely broken even in 2009 and 2010.

In 2013, when the hospital announced a stronger financial performance, Vandenack returned to the 990s to provide context. He wrote:

EGH finished 2011 with a loss of $3.89 million, according to the hospital’s Form 990 filed with the U.S. Internal Revenue Service. That led to the announcement in March 2012 that around 40 posts would be cut along with certain benefits and other cost-cutting measures would be implemented to put the hospital in the black.

So perhaps it was no surprise that the paper trail from the 990s next wound up in court, where Vandenack covered a battle between the hospital and a former executive. That’s the beauty of IRS records. You never know where they will take you.

Photo by ReportingOnHealth.org