Conn. to con­sider tax­ing not-for-profit hos­pi­tals

Modern Healthcare - - THE WEEK AHEAD - —Rachel Lan­den

The lat­est leg­isla­tive fight over tax­ing not-for-profit hos­pi­tals will play out this week in Con­necti­cut, where the state House may vote on a bill to im­pose mu­nic­i­pal property taxes on cur­rently tax-ex­empt hos­pi­tals and col­leges.

That de­bate is tak­ing place in fi­nan­cially strapped cities, coun­ties and states across the coun­try. In New Hamp­shire, law­mak­ers are con­sid­er­ing a bill that would ex­tend the state’s busi­ness en­ter­prise tax to not-for­prof­its in­clud­ing hos­pi­tals. In Pitts- burgh, a suit filed by the city last year against UPMC health sys­tem de­mands six years of back pay­roll taxes while chal­leng­ing that sys­tem’s tax-ex­empt sta­tus.

Con­necti­cut is dom­i­nated by not-for­profit hos­pi­tals. But Tenet Health­care Corp. and Yale-New Haven Hospi­tal re­cently part­nered to en­able Tenet to ac­quire four not-for-prof­its and con­vert them to for-profit sta­tus.

The pend­ing leg­is­la­tion could change the cal­cu­lus for not-for-profit hospi­tal oper­a­tors in Con­necti­cut by ex­pos­ing them to lo­cal property taxes. Sup­port­ers say not-for-prof­its should help pay for city ser­vices they use, while op­po­nents ar­gue that re­mov­ing tax-ex­empt sta­tus would put jobs and char­ity care at risk.

Un­der the Pa­tient Pro­tec­tion and Af­ford­able Care Act, tax-ex­empt hos­pi­tals must con­duct a com­mu­nity health needs as­sess­ment ev­ery three years and im­ple­ment a plan to serve those needs. A study in the New Eng­land Jour­nal of Medicine last April found that not-for-profit hos­pi­tals var­ied widely in the per­cent­age of op­er­at­ing ex­penses de­voted to com­mu­nity ben­e­fits, rang­ing from as much as 20% to as lit­tle as 1%.

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