Nonprofit Hospitals and their Tax Exempt (Charitable) Status s - PowerPoint PPT Presentation

Nonprofit Hospitals and their Tax Exempt (“Charitable”) Status s

Majority of U.S. Hospitals are Tax Exempt

Majority of CA Hospitals are Tax Exempt

Value of Tax Exemption Federal, state, and local tax exemptions = $24.6 billion a year

Federal Community Benefit Standards Direct Benefit to Patients (85%) Benefit to Community (15%) Free or discounted care Community health improvement (“Charity Care”) services (direct spending on community health) Subsidized health services Contribution to community groups (net loss to hospital) Unreimbursed costs for means- Health professions education tested government programs Research (Medicaid) Bad debt and Medicare shortfalls cannot be used to meet IRS’ community benefit standards

Community Benefit Investments after ACA

Hospital Tax Exemption: Key Issues ü Inadequate community benefits in exchange for tax exemption ü Investment in for-profit business ventures ü Aggressive billing and debt collection ü High executive compensation Ø Lack explicit criteria: community benefit activities and management practices

Two State Level Trends ü Establish minimum standards for hospitals to retain tax-exempt status (Illinois, Nevada, Pennsylvania, Utah, Texas) ü Expand reporting of community benefit activities to government agencies and to public

Recent Developments v Hatch & Grassley Letter to IRS (2/15/2018) v CA Hospitals asked for charity care reductions: § USC Verdugo Hills Hospital (Glendale) à $1.7M § PIH Health Hospital (Downey) -> withdrew § Mission Community Hospital (Panorama City) à $1.7M § Emanuel Medical Center (Turlock) à $1.9M

Future Outlook § Increasing accountability à Develop clear, well-defined criteria for tax exemption Focus on population health à Hospitals § contribute to communities by promoting health § Increasing transparency à CA makes all data publicly available online www.oshpd.ca.gov/HID/SubmitData/Communit yBenefit

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