Orange, N.J.-based Barnabas Health President and CEO Barry H. Ostrowsky recently offered his thoughts on a tax court judge's decision to strip Morristown (N.J.) Medical Center of its property tax exemption.
A tax court judge ruled June 26 that Morristown Medical Center failed to satisfy the legal test that it operated as a nonprofit, charitable organization, and further held that the hospital should pay property taxes on nearly all of its property.
The decision is not being taken lightly, as it could cost the hospital between $2.5 million and $3 million per tax year. The ruling has caught the attention of other nonprofit organizations in the state, as it may induce other New Jersey municipalities to file similar lawsuits to challenge the nonprofit status of hospitals.
Mr. Ostrowsky made his comments regarding the property tax ruling on Tuesday when Barnabas Health and Robert Wood Johnson Health System, which has flagship hospital campuses in New Brunswick, N.J., and Somerset, N.J., announced they had signed a definitive agreement to merge, according an NJBIZ report.
Mr. Ostrowsky said he believes the property tax issue should be handled by the state legislature.
"I think it cries out for some level of legislative policymaking, and I suspect you're going to see that over a short period of time," he said, according to the report. "I wouldn't want the full impact of the Morristown case to prevail statewide because that would mean many dollars of property tax that we're not used to paying, but I also don't think the answer is zero, to be honest."
Mr. Ostrowsky believes there is a resolution to be reached regarding nonprofit hospitals' financial contributions to their communities.
"No matter what (type of organization) you are, when you have an organization of our size with facilities at the level of activity that exists on our campuses, you are, to some extent, the user of municipal services," he said. "And so I don't think it's inappropriate to find some way for nonprofit, tax-exempt organizations to help their host communities."
More article on healthcare finance:
CMS proposes changes to Physician Fee Schedule: 15 things to know
Why CFO roles are being filled by Gen Xers
CFOs taking on IT roles: Is this trend headed for healthcare?