The American Hospital Association has taken "strong issue" with a New York Times article questioning how much nonprofit, tax-exempt hospitals give back to their communities, according to an AHA News report.
According to the AHA, the article didn't provide a complete picture of the community benefits hospitals provide. In a letter to the editor, AHA General Counsel Melinda Hatton wrote a recent Ernst & Young report based on Internal Revenue Service data shows hospitals "consistently provided benefits to the community valued at more than 11 percent of their total expenses." Ms. Hatton wrote the report demonstrates hospitals are exceeding IRS community benefit standards.
The article cited a 2013 study from the New England Journal of Medicine that found little consistency in how much tax-exempt hospitals give back. Based on an analysis of IRS filings, the study found hospitals spent an average of 7.5 percent of their operating costs on charity care and community benefit, although some spent less than 1 percent while others contributed roughly 20 percent.
There is no set number for how much a tax-exempt entity must give back. However, new IRS reporting requirements and the Patient Protection and Affordable Care Act have driven more transparency surrounding hospitals and community benefit. Under the reform law, hospitals' tax-exempt status is subject to review every three years.
States and cities are starting to make demands of nonprofits in the wake of the recession. For instance, the city of Pittsburgh has sued UPMC, challenging it to pay payroll and property taxes. UPMC has maintained it contributes to the city in various ways, including the sponsorship of college scholarships.
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