Hospitals are major economic engines in many communities, creating more than 167,000 jobs in the state of Ohio and generating $3.7 billion in local taxes. They also are important providers of essential healthcare services, including emergency, maternity and general medicine. Because of this, nonprofit hospitals are a valued resource in the communities they serve, and retaining their tax-exempt status is vital to their continued success and impact. However, hospitals that seek to retain their nonprofit status have found themselves the focus of varying opinions about whether they are fulfilling their charitable mission by providing enough community benefit to justify their exemption from federal and state taxes. 병원마케팅
Originally, hospitals were supported by private philanthropists and religious groups and operated largely as charities. Their obvious charitable pursuits, such as caring for the sick and poor, rightly justified their tax-exempt status. Over time, Congress and the Internal Revenue Service (IRS) have developed additional requirements that must be met for a hospital to maintain its tax-exempt status. These include a “financial ability test” that requires hospitals to operate to the extent of their financial ability for those who cannot afford to pay and a prohibition against denying care to patients without the resources to pay.
These requirements are a vital component of ensuring that hospitals continue to operate in furtherance of their exempt purposes and provide lifesaving medical treatment to individuals who can’t otherwise afford it. In recent years, some policy makers have raised concerns that tax-exempt hospitals are not meeting these requirements, particularly as more hospitals are pursuing collection of unpaid medical debt from individuals, even though they are likely eligible for financial assistance.
In response to such concerns, policy makers at the local and state level have sought ways to increase accountability and oversight of hospitals’ community benefit activities. This has generally taken the form of expanded reporting and new exemption requirements, as well as lawsuits against hospitals that are not meeting these requirements.
At the federal level, GAO has advocated that the IRS adopt quantitative standards for the amount and type of community benefits hospitals must provide to meet their obligations in exchange for tax-exempt status. Explicit standards would make it easier to compare hospitals’ performance and help ensure that communities are receiving the benefits they need most from their hospitals.
The current hospital tax in Connecticut is 6% of a hospital’s net patient revenues. The rate was set in law after a public hearing on the topic and reflects a compromise between advocates of the community benefits tax and those who believe that a lower, but still significant, tax would discourage hospital investment in needed community improvements.
KFF has long argued that a hospital tax is not the answer to the problems of nonprofit hospital funding, which have numerous causes, but one thing that could help is improved transparency and accountability around community benefit efforts. At the state level, the state of Pennsylvania has a law that is a model in this regard, requiring hospitals to submit detailed reports on their community benefit spending and the specific services they are providing.