Community Benefit

Physician Recruitment

Please Take Note: The information provided does not constitute legal or tax advice. The material is provided for informational/educational purposes only. Please consult with counsel regarding your organization's particular circumstances.

Question: When should recruitment of physicians be reported as community benefit and what can we count?

Recommendation: We recommend that physician recruitment costs be reported as community benefit/community health improvement in category A4: Social and Environmental Improvement Activities even though "workforce development" appears in the IRS Form 990 Schedule H in Part II, Community Building because recruitment for physicians in response to community health needs expands access and can improve community health and thus meet the criteria for community health improvement.

Report physician recruitment costs as community benefit when the organization can document the need for recruiting physicians. This can be demonstrated by:

  • Community's official designation as a Health Professional Shortage Area or Medically Underserved Area.
  • Findings of a community-need assessment, particularly identification of a need for access to primary or specialty care by low-income and other vulnerable persons.
  • Physician shortage identified when compared with national recommendations.
  • Physician is needed to provide a qualifying subsidized activity, for example psychiatrists need to provide mental health services.

Be sure to apply the "prudent layperson" criteria. For example, do not include recruitment of a physician to support a profitable service. Also, we recommend that agreements with recruited physicians include responsibilities to care for underserved persons and populations.

All recruitment costs for targeted physicians (such as interview airfare/hotel, loan forgiveness (student loans and loans for starting practices), signing bonus, income guarantees) can be counted. In accounting for costs such as loans, report the cost in the year in which the expenditure is made.

(Updated November 2015)