Winnsboro, La.-based Franklin Medical Center's board of commissioners agreed Thursday to terminate the hospital's 501(c)(3) charitable status, according to The Franklin Sun.
Internal Revenue Code Sec. 501(r) was created with the passage of the Affordable Care Act and sets forth requirements nonprofit hospitals must meet to maintain federal tax-exemption under IRC Sec. 501(c)(3).
With the board's move, the hospital will no longer have to meet charitable organization requirements such as conducting a community needs assessment every three years. It will also avoid penalties associated with failing to meet those requirements.
Franklin Medical Center Administrator Blake Kramer said ending the hospital's 501(c)(3) status will have little impact on the hospital's operations. The hospital is already tax exempt because it is considered a government entity under the Franklin Parish Policy Jury, according to the report.
"We may miss out on some grants, but the only big change is not having to worry about the IRS coming and saying 'you owe us a bunch of taxes,'" said Mr. Kramer.
At Thursday's meeting, Franklin Medical Center CFO Billy Page said "accounts receivable is big," which indicates the hospital is struggling with collections. Without 501(c)(3) status, the hospital will be able to more aggressively pursue collections because it will no longer have to wait 120 days to pursue claims for nonpayment as is required to maintain charitable status under the Internal Revenue Code.
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