Tax Breaks for Nonprofit Hospitals Called Into Question

With cities still suffering financial woes from the recession, more people are questioning whether nonprofit hospitals offer enough charitable care to qualify for tax-exempt status, says The New York Times.

Provisions of the Affordable Care Act make it clearer just how much charitable care nonprofit hospitals are doing, and many have been found wanting.

Hospitals are often the biggest landowners in cities, costing the towns revenue.

A study published in The New England Journal of Medicine found that hospitals, on average, spend 7.5 percent of their operating expenses on charitable care and community benefits, based on Internal Revenue Service information data. The range is from less than 1 percent to more than 20 percent.

According to Gary Young, an author of the article and a professor at Northeastern University, “Nonprofit hospitals may have been founded on the basis of community need, but that doesn’t mean they’re not very profitable. Towns are hurting, and they see this affluent institution in their midst on lots of land and say, ‘Hey, cough up some money.’ ”

 

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