Case Study 1

Innovation in Health Education Programs

Health education and health promotion programs are capable of reducing the incidence of chronic diseases. One way in which nonprofit health care organizations can benefit communities is by providing resources for community health projects. Nonprofit health care organizations must produce some community benefit in order to maintain tax-exempt status. Nonprofit organizations' concern in regard to this Internal Revenue Service (IRS) regulation was used to acquire money from a third-party health insurer to complete a health assessment of a county in order to develop a Web site for giving information to county residents about the health problems uncovered by the survey.

Emanuel (2008) points out that our country loses a larger percentage of individuals to diabetes than other industrialized countries because fewer Americans have a primary care physician. Therefore, they are not as well-versed in the value of avoiding high-risk health behaviors. Our system devotes precious few resources to public health and health education programs.

The irony in our attempt to find a solution to the health care crisis is that we have had that solution ever since public health departments in this country began to realize the value of prevention programs. Moving past the mission of public health—to prevent disease and improve the health of the population—it is very clear that public health departments have the tools to keep people healthy. These tools of prevention should be utilized by the entire health care system to keep people healthy rather than allowing them to become ill.

Public health departments in the United States have been unable to capitalize on their accomplishments in improving the life expectancy of most Americans. Their funding is reduced every year, they are losing many of their most experienced workers to retirement, and they have been unable to move past their previous success. Herbold (2007) introduced the legacy concept, whereby an organization becomes convinced that because it has achieved past success with a certain approach it is entitled to future success using the same approach. This attitude makes businesses and agencies resistant to new approaches for solving current problems.

An example of the legacy concept in public health is found in the strategy public health departments have embraced in dealing with human immunodeficiency virus (HIV), which has plagued this country since 1981. This approach calls for using the counseling and testing approach to HIV even though it has not worked and will not work. HIV has become a chronic disease and will never be eliminated or even controlled unless health education becomes the new strategy to deal with this deadly infection.

Financing Health Promotion Programs

Missed workdays and lower employee productivity due to illness as well as expenses associated with the treatment of chronic diseases cost the U.S. economy $1.3 trillion annually, and it is estimated that this figure will grow to $4.2 trillion by 2023 (DeVol and Armen, 2007). However, with modest improvements in prevention and early treatment of chronic diseases forty million cases of chronic diseases (with an annual economic impact of $1.1 trillion) could be avoided by 2023 (DeVol and Armen). One key to achieving this outcome lies with local health departments (LHDs), which use health education programs to reduce the incidence of chronic diseases among community residents. Although these departments have had great success in reducing the high-risk health behaviors that result in the development of chronic diseases later in life, their programs' sustainability is intrinsically tied to the availability of appropriate funding.

LHDs are financed through a complex, fragmented, and often confusing combination of federal and state grants, appropriations, and fees. One major source of funding for LHDs is the CDC's Preventive Health and Health Services (PHHS) Block Grants. These grants, established by Congress in 1981, give LHDs the flexibility to tailor health promotion programs to the specific needs of their respective communities. Examples of chronic disease prevention activities to which many LHDs devote PHHS funds include screening programs and programs that promote healthy eating and physical activity. However, cuts in the 2009 CDC budget would eliminate these PHHS funds (CDC, 2008a). The CDC raises the need to improve efficiency and effectiveness as the rationale for the elimination of funding, stating that “other existing resources will continue to be available for programs which have traditionally addressed similar public health issues” (CDC, 2008a, p. 13). However, the National Association of County and City Health Officials (NACCHO, 2008) estimates that the elimination of the PHHS funds would cause a loss of $40.8 million for chronic disease programs and $11.2 million for infectious disease programs. This is just one example of how LHDs are faced with a continuing pattern of declining funding and as a result are forced to explore alternative methods of funding to improve chronic disease prevention. One alternative financing mechanism LHDs have employed has been to use the IRS community benefit standard to form a community partnership with a third-party health insurer to acquire funding for health promotion initiatives at the local level.

Internal Revenue Service—Community Benefit Standard

The IRS grants tax-exempt status to health care and related service organizations under section 501(c)(3) of the Internal Revenue Code. Under this section, an organization must not only operate on a nonprofit basis but also qualify as a charitable organization by serving the public interest through what is called the “community benefit standard.” The community benefit standard was first established in 1969 under Revenue Ruling 69-545, in which the IRS recognized that programs promoting health are considered to have a charitable purpose under the common law of charity. Promotion of health is deemed beneficial to the community as a whole even though the class of individuals eligible to receive a direct benefit from activities does not include all community members, provided that the class is not so small that its relief is not of benefit to the community.

For nonprofit health care organizations, providing community benefit is the principal standard for maintaining tax-exempt status. However, it is becoming increasingly difficult to differentiate for-profit health care organizations from the nonprofit ones, and as a result, both the IRS and Congress have begun to challenge the appropriateness of the community benefit standard. The IRS wants to make tax-exempt entities more accountable for their activities and to quantify the supply of community benefit provided. One way in which nonprofit health care organizations can demonstrate benefit to their communities is to engage in community partnerships, providing resources for the development, implementation, and evaluation of educational efforts geared toward prevention of high-risk health behaviors.

The health care consultant who was trying to start the Luzerne County Health Department in Pennsylvania used the community benefit standard to request seed money. Hospitals and insurance providers contributed the money. This seems like a logical way for a health care organization to maintain its nonprofit status and improve the health of its community.

In January 2008 the program director for a graduate program in health care administration met with the CEO from a large health insurance provider in regard to the development of an innovative health education program. The program director mentioned the community benefit standard as the reason why the CEO should consider providing funds for this new education program. The CEO accepted the request, and the health insurance provider supplied funding to conduct a community health assessment that was to be the catalyst in the development of a Web-based education program designed to provide free health information to residents concerning the health problems the assessment uncovered.

The major cause of the continuing escalation in the costs of health care in the United States is the epidemic of chronic diseases. These diseases are expected to cost the U.S. economy more than $1 trillion a year, and this figure could rise to $6 trillion by 2050. These diseases are the result of practicing poor health behaviors like using tobacco, maintaining a poor diet, and being physically inactive over the years. Today's public health system needs to position itself to capitalize on the many opportunities available as the focus and goals of the health care system are being reorganized. These opportunities for improving the health of the population are also available to such other nonprofit agencies as insurance providers, health care organizations, and colleges.

Health education and health promotion programs are capable of reducing the incidence of chronic diseases and have also been effective in reducing the costly complications that result from these diseases over time. Such educational efforts have had great success in reducing the high-risk health behaviors that result in the development of chronic diseases. However, the success of these programs is dependent on community partnerships that increase the amount of resources available to support the expansion of programs with proven best practices.

LHDs can use the community benefit standard to pressure nonprofit health facilities to provide resources for the development, implementation, and evaluation of educational efforts geared toward the prevention of high-risk health behaviors. One way in which a nonprofit health care organization can act to benefit its community is to provide resources for community health projects. LHDs need to use this IRS regulation to acquire money from third-party health insurers and nonprofit hospitals to develop and implement population-based health education programs for reducing high-risk health behaviors that lead to chronic diseases.

Discussion Questions