WASHINGTON – The nation’s not-for-profit hospitals are likely to face more scrutiny into whether the services they provide merit their tax-exempt status.
The Government Accountability Office is expected to further study those hospitals’ community benefits as they relate to their tax-exempt status and other related breaks on taxes.
The GAO received the request early last month from Sen. Chuck Grassley (R-Iowa), the ranking Republican on the Senate Finance Committee.
Grassley is requesting that the GAO conduct a study that:
• describes the community benefit standards that states and the IRS have established;
• describes any guidelines the hospital industry uses to interpret those standards;
• examines the standards and policies that not-for-profit hospitals use to define the components of uncompensated care, charity care and bad debt;
• studies how not-for-profit hospitals interpret the community benefit standard for community benefits other than uncompensated care; and
• examines the level of not-for-profit hospital executive and board compensation and the level of involvement they have with for-profit business ventures involving their organizations.
The request follows an inquiry Grassley conducted last summer, when he asked various not-for-profit healthcare organizations how they measure community benefits. He received wide-ranging answers from the providers, and in his request to the GAO he noted the need for more specificity in measuring community benefit.
“I am concerned that the amount of uncompensated care provided by nonprofit hospitals is an imprecise measure of the amount of charity care provided by hospitals,” Grassley wrote in his letter to the GAO. “The amount of uncompensated care reported by a hospital can vary based on the policies hospitals set on whom is eligible to receive charity care and their policies on bad debt.”
Grassley also noted that he is concerned about the level of compensation that provider organizations pay hospital executives and board members, as well as their involvement with for-profit business ventures with the not-for-profits they direct.
The information requested likely will provide data from which legislators could better define what level of activities merit tax-exempt status.
“The community benefit standard means different things to different people,” Grassley said. “We need a better handle on how not-for-profit hospitals are fulfilling their requirement to serve the community in exchange for the generous tax breaks they receive.”