Hospitals Get Charity Tax Treatment, Treat Fewer Charity Cases
An in-depth review by the Boston Globe has found that the value of abundant tax exemptions extended to Massachusetts General Hospital, and other private non-profit hospitals, "far exceeds the amount the state's leading hospitals spend on free care for the poor and other community benefits." The review calls into question the societal function of non-profit hospital corporations such as Mass. General's parent company, Partners HealthCare, which boasts investments totaling more than $4 billion.
Medicine has grown into a big business since hospitals like Mass. General were founded as charitable institutions to care for the poor in the 19th century, increasing the value of exemptions in proportion to their earnings, and decreasing the amount of charitable services they provide as programs like the Children's Health Insurance Program and Medicaid have extended coverage to more patients. The ten biggest hospitals in the state benefited from $638 million in tax breaks in 2007, but reported only $265 million in "community benefits" provided that year, the Globe found.
Some public officials, including Sen. Chuck Grassley, R-Iowa, have suggested that greater regulation may be needed to insure that nonprofit hospitals expand their charitable care and benefit society. Massachusetts Inspector General Gregory Sullivan told the Globe, "The time is right for the Commonwealth of Massachusetts to objectively and comprehensively examine the total tax breaks that are being provided to nonprofits in healthcare versus the community benefits."
"[A]s nonprofit hospitals have been increasingly run like businesses, the successful ones have adopted practices similar to those of for-profit companies, aggressively expanding into the markets of other hospitals and using their clout to charge higher prices for their services," the Globe reports. And, against the backdrop Washington's reform debate, Grassley pointed out that a further expansion of coverage could make free care even more obsolete. In the meantime, Massachusetts officials are eyeing the millions of dollars in lost tax revenue (Allen and Bombardieri, 5/31).