Hospital Business Acumen: Form 990 & Why You Should Care!

If you sell to Not-For-Profit (NFP) hospitals one of the best kept secrets is Form 990 and the wealth of information it can provide to sales representatives, especially if you sell to hospital executives and the C-Suite.

The Form 990 is the tax document that tax-exempt non-profit organizations file each year with the IRS. It’s the form that provides the Internal Revenue Service (IRS) and the public with the ability to evaluate non-profit organizations and their operations. Many of these are available online or by request from the hospital.

Key Information ProvidedHere are just a few examples of the information that is provided in the 990:

  • Name and address of the organization, year of formation and web-site address
  • The hospital’s fiscal year start and end date
  • Number of voting members of the governing body
  • Number of independent voting members of the governing body
  • Number of people employed
  • Total revenue, total expenses and net assets
  • Description of the hospitals inpatient and outpatient services and mission
  • Restricted endowments, permanent endowments or quaisi endowments
  • Amount paid for land, buildings and equipment
  • Audited financial statements for the year
  • Compensation of the organizations current and former officers, directors, trustees, key employees and highest compensated employees
  • Tax exempt bond status
  • Cash contributions over $25,000 (amounts only, donor names are redacted for privacy)
  • List of independent contractors and fees paid
  • Statement of revenues, statement of functional expenses, balance sheet and reconciliation of net assets
  • Political campaigns and lobbying efforts-monies paid
  • Financial assistance provided
  • Other healthcare facilities that are not licensed, registered or similarly recognized as a hospital i.e. out-patient services owned, physician practices etc.
  • Grants or assistance provided within the community

Filing DateThe 990 must be filed by the 15th day of the 5th month after their accounting period ends. This is why it’s important to know when the hospital’ fiscal year ends. Most hospital’s fiscal year are January 1st – December 31st, July 1st- June 30th or October 1st-September 30th.

AvailabilityNon-profit hospitals are required to make their 990 and their exemption application available for public inspection without charge during regular or business hours. Many hospitals post these on their web-sites.

Missing 940sThere are several reasons why you may not be able to find a 990 for a NFP hospital:

  • The hospital may not be required to file. For example: most faith based organizations, state institutions or subsidized organizations are covered under a group return filed by the parent organization.
  • The hospital has not yet filed for the year.

Parting Thoughts

If you sell to NFP hospitals and want to increase your business acumen, the Form 990 can help you. It provides information on the filing organizations mission, programs and finances. Read the Form 990 on the hospitals that you sell to and use the added knowledge to make you more comfortable in the C-suite, confident with purchasing committees and convincing with clinicians.