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  • A Tax Fight in Pittsburgh and the Future of Non-Profit Hospitals Nationwide

    Time - 06/10/2013

    But local Pittsburgh politics aside, large non-profit health systems are getting new attention from city and state tax officials across the country facing budget crises. “The fact is hospitals are coming under more scrutiny,” says Gary Young, director of Northeastern University’s Center for Health Policy and Healthcare Research. “The city’s willingness to take on a hospital with the cachet that UPMC has is sending a chill down the spines of many hospitals around the country who are saying, ‘If this is happening in Pittsburgh, what could happen with us?’”

    The requirements to be a tax-exempt non-profit in Pennsylvania are tougher to meet than in many other states, but generally, health care systems must have a charitable mission and benefit the local community. In exchange, they are effectively subsidized by taxpayers. Under the Affordable Care Act (ACA), beginning next year, hospitals that are exempt from federal taxes must develop and submit to the Internal Revenue Service detailed assessments of the health care needs of their local communities, along with plans to help meet those needs. Young is the lead author of a paper published in the New England Journal of Medicine in April 2013 that found that in 2009, tax-exempt hospitals spent just 7.5 percent of their operating expenses on community benefits. “We are, to some degree, moving into a new era in terms of some of the expectations we have for hospitals that have tax exempt status,” says Young. “Pittsburgh could be a watershed event.”