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Dispute grows over tax exemptions for nonprofit hospitals : BusinessA controversy is brewing over state and local property tax exemptions for nonprofit hospitals, as struggling localities eye the potential revenue from the real estate beneath sprawling medical centers. For instance, the city of Pittsburgh, Pa., has sued the University of Pittsburgh Medical Center to challenge its tax-exempt status.
A nonprofit health systems charity care is unlikely to surpass the public funding it receives via federal and state tax breaks. A landmark study, issued in 1990 by the Government Accountability Office, showed that 57 percent of the nonprofit hospitals provided less charitable care than the value of the tax exemption they received.
More recently, the American Civil Liberties Union and nonprofit MergerWatch, in a recent report about the growth of Catholic hospitals and the threat to reproductive health care, concluded that, when compared to other types of hospitals, Catholic-sponsored and affiliated hospitals provide disproportionately less charity care than do public hospitals and other religious nonprofit hospitals, and less care for Medicaid patients than any other type of hospital.
Why should these organizations that sit on millions and billions of valuable property not pay any taxes? They get police protection, fire protection and other public services, he said.
http://www.nytimes.com/2013/12/17/us/benefits-questioned-in-tax-breaks-for-nonprofit-hospitals.html?_r=0Hospitals, among the largest landowners in many communities, are often designated as nonprofits, allowing them to benefit from state and federal tax breaks for providing charity care and community benefit. The exemptions collectively amount to more than $12 billion annually, health economists say.
Under current practices, they say, hospitals can overstate the value of the charity care they provide by subtracting the fees they collect from their estimated costs, which are highly subjective. If a hospital forgives a $3,000 bill for three stitches for a poor patient, how much of that should be counted as charity if the charges are greatly inflated?
