For some hospitals, tax breaks outstrip charity care

Andrew Van Dam

About Andrew Van Dam

Andrew Van Dam of The Wall Street Journal previously worked at the AHCJ offices while earning his master’s degree at the Missouri School of Journalism.

A story by Boston Globe reporters Scott Allen and Marcella Bombardieri questions the provision of nonprofit status for hospitals and the tax breaks that come with it, vestiges of a time when hospitals needed financial incentives to treat the nation’s poor.

They look at Massachusetts hospitals pulling in billions of research dollars and making liberal use of their tax incentives. An intensive review of relevant records revealed that the value of these tax breaks far exceeds the value of the free care the hospitals provide for the poor, the reporters say.

The 10 leading hospital companies benefited from an estimated $638 million in federal, state, and local tax breaks as well as state discounts on borrowing in 2007, the latest year for which complete data are available. More than half of that goes to two large and growing companies, Partners and Children’s Hospital. Overall, the 10 hospital companies’ tax breaks and other benefits were worth $264 million more than the value of the “community benefits” – care for the poor and other charity work – they reported to the state attorney general that year.

The reporters also note that Massachusetts health care reform has helped increase the gap; hospitals now provide half as much free care as they did before reforms were instituted (Today, about 1 percent of patients don’t have to pay). In the midst of a climate of tight budgets and potential reforms, a group of politicians led by Republican Sen. Charles Grassley of Iowa is calling for rules holding nonprofit hospitals to higher standards of charity work than their for-profit peers.

The in-depth story digs deeper into potential reforms and issues and paints a detailed financial picture of the impact the nonprofit status of major hospitals is currently having on the state’s budget.

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