You may have heard the phrase “unprecedented times” an unprecedented number of times over the past year and a half – especially as COVID-19 and its variants continue to wreak havoc across communities, industries, and economies worldwide.

But it’s true – direct service providers, businesses, governments, foundations, and communities alike currently face many challenges and changes. Of particular concern is the transition into an increasingly digital landscape. Not to mention a plethora of social issues and inequities worldwide. Nonprofits struggle with tighter and tighter budgets, increasing accountability requirements, and navigating the challenge of addressing equity. These are just a few of many issues we collectively face in the public and nonprofit sectors, and healthcare organizations are no exception.

Due to the critical role nonprofit healthcare plays in the well-being of children, adults, and families worldwide, we must all work together to support these organizations as much as possible.

Here are a few challenges and trends nonprofit healthcare organizations and their partners should keep in mind as they continue to grow their services, maximize their funding, recover from the effects of COVID-19, and create long-term, equitable, measurable impacts in health:

1. Maintaining Tax-Exempt Status: 501(r) Compliance

   The IRS may be increasingly policing compliance with Section 501(r) of the Internal Revenue Code. Nonprofit hospitals have become a target for evaluation and must place keeping their tax-exempt status high on their priority list.

   For example, in 2017, the IRS revoked a hospital’s tax-exempt status for the first time. The IRS claimed that the hospital failed to perform a community health needs assessment, formalize an improvement and impact strategy, and transparently communicate it with the public.

   All nonprofit healthcare organizations should keep the following in mind when maintaining their tax-exempt status:

   • Performing a Community Health Needs Assessment that clearly defines the community, utilizes a data management system, engages stakeholders and residents, includes the context behind the data, prioritizes and triages health issues, and focuses on continuous improvement. You can learn more about how to do this here.
   • Establish a financial assistance policy (FAP) and emergency care policy that limits amounts charged to FAP-eligible individuals
   • Determining eligibility for appropriate medical assistance before acting. This includes analyzing and eliminating areas where duplication of efforts is occurring, and resources are being wasted.

2. Increasing Donor Retention and Stewardship

   According to a Blackbaud analysis, nonprofit healthcare is leading the charge to remote work, services, and fundraising. This includes a:

   • • 7% year-over-year increase in online revenue for healthcare organizations (the good news)
     • 66% retention rate for multi-year, online-only donors (the slightly not-great news, yet there is much room for improvement)

   The increase in new online funding and trend in intentional giving calls for a need to prioritize donor retention. Healthcare fundraisers can convert one-time donors to long-term supporters with purposeful stewardship, communication, transparency, and cross-sector collaboration.

   To do this, there must be an authentic effort to demonstrate the value and impact of giving. You can accomplish this in various ways, and it’s probably best to engage in diverse, mutually supportive activities. Some of these may include exploring new methodologies and innovations in service delivery, establishing a common framework for impact, employing technology solutions for public performance reporting, and more.

3. Continued Uncertainty in the Market

It recently seemed we were all so close to recovery from COVID-19, but variants are emerging, and cases are rising once more. We’ve also experienced a loss of at least 1 million jobs. All sub-sectors continue to struggle, but health care, education, the arts, and social assistance seem to be facing the most daunting challenges. Unfortunately, the evidence predicts that one out of three nonprofits will close due to this pandemic.

This is alarming, but the industry is also experiencing significant growth in some aspects — as much as 20%. As a result, the consolidation of some nonprofit and healthcare organizations could help to improve efficiency and reduce duplicative efforts.

At the very least, nonprofit organizations should work to increase collaboration among localized service providers. Engaging residents in their own well-being should be a given in place-based decision-making that genuinely reflects the whole community’s needs, priorities, skills, behaviors, and resources. A method to achieve this could be the Asset-Based Community Development methodology.

4. Innovations in Service-Delivery Methods

Virtual care, while an option for several years, exploded as a result of the COVID-19 pandemic. Experts predict these trends will only continue to grow in 2021. Virtual options continue to grow, resulting in increased access for many people, decreased costs, and more efficient operations for providers.

Some virtual care options that have already been added include weight management, chronic condition care, prenatal care, and musculoskeletal care management/physical therapy. In addition, healthcare service providers will focus on improving quality, outcomes, effectiveness, patient impact, cost reduction, and patient-service fit.

These activities may appear disjointed on paper, but a framework and tools that focus on data, continuous improvement, effective collaboration, budgeting for impact, and transparency will help consolidate efforts and ensure a healthcare organization’s services, strategies, and funding procedures are mutually reinforcing. Many healthcare organizations, hospitals, and health agencies utilize the Results-Based Accountability (RBA) framework as their all-encompassing strategy.

Check out our blog for 3 case studies on healthcare entities and RBA.

5. Advancing Equity in Health

The pandemic has exacerbated disparities in health care related to race, ethnicity, geography, gender, and socioeconomic status. These gaps manifest themselves in all aspects of well-being, including differences in access to services, disease prevalence, service outcomes, mental well-being, mortality, infant survival rates, addiction, and many more. In 2021, more healthcare providers plan on increasing efforts to examine and advance health equity while mitigating the harmful effects of social determinants of health.

Using evidence to guide budgeting in healthcare encourages healthcare organizations to invest in what is known to be effective or proven to work while allocating funding towards goals and future achievements.

Budgeting for equity could also be a potential goal for these organizations. Result-based budgeting (or performance-based budgeting) is an effective strategy to consider. RBA is a framework for social change that many communities and governments use to create their results-based budgets. These are potential solutions for meeting accountability and transparency requirements while building a basis for long-term, equitable, sustainable impact.

For more helpful information on health and healthcare efficiency, visit our blog here.