Who sets the terms for hospitals’ community benefit?

August 6th, 2018

Is a non-profit hospital always better than a for-profit hospital? Not necessarily. In Montgomery county, Pennsylvania, two towns are trying to prevent a multi-million dollar hospital chain from getting non-profit status for good reason — nearly $1 million in local tax revenue is on the line.

Non-profit hospital chain Tower Health recently purchased five for-profit hospitals in the area, the Reading Eagle reports. Tower Health is moving to transfer their non-profit status to the new acquisitions, taking away the Pheonixville and Pottstown school districts’ largest taxpayer. 

Tower Health officials argue that the hospitals acquired under Tower will provide a community benefit worthy of the tax exemption. But who decides what counts as a sufficient community benefit?

So far, hospitals have been the deciders. “Hospitals have had a nearly complete say over how they define that charitable benefit,” said Lown Institute senior vice president Shannon Brownlee, quoted in the Eagle.

The question of whether hospitals should be able to claim tax-exempt status has become more contentious over the past few years, as hospitals have expanded at a rapid pace. In Pittsburgh, residents are pushing back against UPMC’s expansion plan, a plan that does little to improve the health of underserved community members.

Before the Pittsburgh City Council vote, UPMC gave the council their proposed community benefit: an “unsigned list of bullet points” including job training and recruitment, an expanded primary care program, and an addiction clinic. As advocates pointed out, the list did not address some of the most important issues brought up by community members, such as union-busting, poor treatment of workers, and denial of care to people with certain insurance plans. 

Now, residents of Montgomery county and Pittsburgh are calling attention to insufficient community benefits. “These school districts are recognizing there are real trade-offs between subsidizing hospitals and being able to invest in things like schools,” Brownlee said. “They need to be advocating for themselves. Communities need to understand what the battle lines are.”

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