What is corporate social responsibility in healthcare?

Defining corporate social responsibility in healthcare

According to the Harvard Business School, corporate social responsibility is "the idea that a business has a responsibility to the society that exists around it."

IBM says that corporate social responsibility means companies prioritize not just profit but also the impact they have on the environment and society around them.

"Through CSR, companies make decisions driven by financial gain and profitability, and the impact of their actions on their communities and the world at large," IBM says on its website. "CSR goes beyond legal obligations: by voluntarily adopting ethical, sustainable and responsible business practices, companies seek to deliver benefits to consumers, shareholders, employees and society."

Like other industries, many healthcare organizations have embraced their social responsibility. According to Charity Miles, an organization that facilitates corporate walks and runs for charitable causes, healthcare social responsibility is closely linked to SDOH.

"Corporate Social Responsibility (CSR) in healthcare involves healthcare organizations ethically contributing to community health and well-being through sustainable practices, enhanced healthcare access, and initiatives tackling social health determinants like poverty and education to better health outcomes," Charity Miles says.

According to the American College of Healthcare Executives (ACHE), which counts CSR among its chief commitments, social responsibility can be exemplified in six pillars:

• Responsible advocacy.
• Environmental and economic stability.
• Public protection through ethical practices, self-regulation and support of human rights.
• Diversity.
• Philanthropy and community service.
• Socially responsible leadership.

The benefits of CSR are manifold. Of course, CSR can support the community a hospital or health system serves, but most experts agree the practice can also support the healthcare organization itself.

Hospitals and health systems that practice CSR might improve their public image, boosting consumer trust and patient loyalty. On the flip side, they might also help close health disparities by supporting SDOH.

Notably, CSR is voluntary for nearly every corporation, including hospitals and health systems. However, for hospitals and health systems with nonprofit and tax-exempt status, CSR might seem like a de facto requirement.

Corporate social responsibility and nonprofit status

Nonprofit 501(c)(3) hospitals receive tax-exempt status from the IRS in exchange for practices related to charity care and social responsibility. Those requirements, mandated as part of the Affordable Care Act (ACA), include the following:

• Completion of a community health needs assessment.
• Operating an emergency department open to everyone, regardless of ability to pay.
• Financial assistance policy.
• Limitations on charges for individuals who qualify.
• Compliance with certain billing and collections policies.

To be clear, the IRS does not mandate CSR for nonprofit hospitals. However, the community benefits that nonprofit hospitals do have to provide, which can include charity care and other charitable programs to benefit the community, often align with a strong CSR strategy.

In essence, nonprofit hospitals are required to design their operations to support the communities they serve rather than funneling all profits to shareholders. This means operating under a CSR structure.

However, murky requirements make it difficult to measure a hospital or health system's social responsibility. There is no minimum amount nonprofit hospitals need to spend on community benefits, meaning some hospitals spend as little as $.01 on the dollar in community benefits, according to one 2018 Health Affairs study.

Oversight might also be lacking. A 2020 Government Accountability Office (GAO) report showed as many as 30 hospitals did not spend anything on community benefits.

This has led to some discrepancies regarding how much nonprofit hospitals and health systems put toward community services and whether that is enough.

According to a 2023 American Hospital Association (AHA) report, nonprofit hospitals gave more than $20 billion in community benefits in 2020, accounting for 15.5% of total expenses.

That conflicts with a 2024 report from the Lown Institute showing that nonprofit hospitals spent 3.87% of their budgets on community benefits, making the tax breaks they see as 501(c)(3) organizations exceed their total community benefit spend.

There is little evidence explaining the discrepancy between community benefit and social responsibility giving. Factors like variable definitions and standards, accounting practices, reporting requirements and data sources could be at play.

Regardless, nonprofit hospitals and health systems looking to improve their community benefit practices or public image and patient loyalty might turn to common CST practices.

Examples of CSR in healthcare

There is no one-size-fits-all approach for CSR in healthcare. Social responsibility in one community might look different than it does in another.

For example, a hospital prioritizing CSR in a community with many food deserts might invest in food delivery modalities and fund community food banks or farmer's markets.

Meanwhile, a different health system's CSR might manifest as financially backing affordable housing complexes because it treats a larger unhoused population.

CSR does not need to be informed by community needs assessments, but it does help to know what types of resources would support the community a hospital serves. From there, health systems can assess their own resources and community partnerships to identify high-yield intervention areas.

Some leading examples of CSR in healthcare include the following:

• Mobile health clinics to support free or subsidized patient care access.
• Workforce development.
• Environmental conservation.
• Donating of medical supplies.
• Investments in affordable housing.
• Social determinants of health interventions.

As noted above, CSR work can be closely linked to a nonprofit hospital's community benefits. Offering charity care is considered CSR work, as is reviewing financial assistance programs.

Practicing CSR is part of a key cultural shift focusing on social responsibility and business ethics. As key anchor institutions, healthcare organizations might consider different CSR strategies as they work not just to improve the health of communities but also their own public image and consumer loyalty.

Sara Heath has covered news related to patient engagement and health equity since 2015.