Panel Explores Nonprofit Hospitals’ Charity Care, Tax Breaks

Hannah Report - June 16, 2005

The Hannah Report

A hearing into whether Ohio’s nonprofit hospitals are meeting their duty to provide charitable care in exchange for the tax breaks they receive ended on a sour note as the chair of the panel, Rep. Barbara Sykes (D-Akron), chastised the hospital representative for his attitude. “For someone who has been around here for all these years, you are the only person who did not recognize the chair in answering questions. I sense impatience, disgust — no empathy in your responses.

“We are not talking about your hospitals. We are talking about the communities’ hospitals which they are there to serve.”

With that she dismissed John Callender, senior vice president of the Ohio Hospital Association, and adjourned the bipartisan, bi-cameral committee. Callender had a challenging task responding to a wide range of findings presented by a representative of the Minnesota attorney general’s office, an Ohio University professor and a representative of SEIU District 1199, a union representing a range of health care workers.

SEIU unveiled a new study of Ohio nonprofit hospitals’ charitable care Thursday. Entitled “Crossing the Line,” that report found that the estimated value of Ohio hospitals’ tax benefits were $898 million while the amount spent on uncompensated care for the uninsured totaled $219 million in 2003.

As noted by Scott Courtney, SEIU executive vice president, “The charity care provide by Ohio’s nonprofit hospitals equals only 1.4 percent of their total expenditures. This is no more generous than the charity care provided by for-profit hospitals [which] devote an average 1.5 percent of their expenditures to charity care, and they pay taxes.”
Lori Swanson, solicitor general in the Minnesota attorney general’s office, detailed worldwide junkets, expensive perks including masseuses in the boardroom, and exorbitant salaries — findings they uncovered in compliance audits of three nonprofit hospitals in that state. She said they also found aggressive debt collection practices and salary garnishments.

According to Swanson, the outgrowth of their efforts has been the development of a fair pricing and bill collections practice agreement which approximately 60 percent of their hospitals have voluntarily agreed to follow.

Another approach to these concerns was outlined by Zach Schiller of Policy Matters Ohio who described how hospitals in other communities around the country make payments in lieu of [property] taxes (PILOTS) to help offset the loss of local taxes. “The Cleveland Clinic Health System and University Hospitals Health System would pay another $17 million in annual taxes to the city of Cleveland if all of their property were taxable.”

Also testifying was Ohio University Professor Deborah Thorne, one of the authors of the recent Harvard study “Illness and Injury as Contributors to Bankruptcy,” which found that medical bills contribute to roughly half of all personal bankruptcies. “The U.S. Bankruptcy Court reported that in 2004, 88,400 Ohio residents filed for non-business bankruptcy. Extrapolating from our findings, this would suggest that over 44,000 Ohioans filed medical bankruptcies last year … The out-of-pocket costs for these bankrupt folks averaged a whopping $13,400!”

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