Intermountain Health Care, Salt Lake City, has learned once again that local property-tax exemptions for its not-for-profit hospitals aren't always a sure thing.
In two of the 12 Utah counties where IHC does business, the 22-hospital system faced renewed questions about what its facilities do for their communities to justify their property-tax exemptions.
It's not unfamiliar territory for IHC, whose long-running battle with local taxing authorities in the late 1980s resulted in some of the nation's first-ever property-tax exemption standards for not-for-profit organizations. Some critics, however, contended the standards were too lenient and easy to meet. In fact, some of the standards were nearly identical to the ones proposed by IHC.
In Salt Lake County, where IHC operates four hospitals, the county's nine-member board of equalization voted last week to maintain IHC's tax exemption but not before it required the system formally to present its case for an exemption, rather than grant automatic approval to its yearly application.
Some county board members had questioned whether IHC was using its profits to provide charity care or build market share.
At issue were exemptions for three IHC hospitals in Salt Lake County. The board previously had granted an exemption for the system's 191-bed Primary Children's Medical Center, Salt Lake City. The exemptions save IHC more than $3 million annually in property taxes, county officials said.
As part of its approval, the county board required an audit of IHC's charity care expenditures and required the county to create a task force to review and help develop IHC's 2002 charity plan, said Karl Hendrickson, Salt Lake County's chief deputy district attorney. It is unclear who will perform the audit.
"They meet the legal requirement," said County Councilman Michael Jensen. But he added, "Maybe I would like to see a little bit more back to the community."
The system's four Salt Lake County hospitals last year provided more than $19 million in charity care, which does not include bad debt, said Douglas Hammer, IHC's vice president and general counsel. As a whole, the system provided $33 million in charity care last year, which was 1.8% of the system's total expenses.
In 1999, U.S. hospitals spent 6.2% of their expenses, or $20.7 billion, on uncompensated care, which includes charity care.