Nonprofit hospitals under the taxman’s magnifying glass


Nonprofit hospitals getting challenged on their tax-exempt status have been much in the news of late.  

  • On Jan. 8, the  Chicago Tribune  reported on a decision by an Illinois appeals court to reopen argument over the constitutionality of a 2012 law allowing hospitals to claim exemption from various taxes.
  • The same day,  ran a story  on the Garden State’s nonprofit hospitals facing the prospect of paying fees to cover public-safety services and help reduce property taxes.
  • Also on Jan. 8, the  Health Affairs  blog stressed that, going forward, “an important question becomes whether national health policies applicable to tax-exempt hospitals should be further revised to more actively encourage investments that improve health on a community-wide basis.”

The flurry may partly trace to a January 2012  Health Affairs  study showing that some tax-exempt hospitals aren’t spending any more than their for-profit counterparts on charity care or community health.

Last summer, in advance of the study’s publication, co-author Renee Hsia, MD, MSc,  told the  Washington Post  that the takeaway from the research “is not that we should not be giving tax breaks, but that there should be a little more accountability.”

Hsia added, “These are exemptions that, if we didn’t have them, could fund education, water or public utilities.”

For those inclined to explore the questions at hand in greater detail, the Internal Revenue Service offers for online consideration the final report on its  Nonprofit Hospitals Project.