The majority of hospitals in the United States operate as nonprofit organizations and, as such, are exempt from most federal, state, and local taxes. This favored tax status is intended to be an acknowledgement of the "community benefit" provided by these institutions.
Public controversy over whether nonprofit hospitals provided community benefits sufficient to justify their favored tax status gave rise to congressional scrutiny during 2005-09 and culminated in the inclusion of new community benefit requirements in the Affordable Care Act (ACA). Not only are these new requirements intended to improve transparency and accountability, but they are also part of a strategy to address the ACA priorities of preventive care and population health through community health improvement activities.
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