An HCA hospital is lobbying the city of Fort Worth, Texas, for a property tax break that could total $2 million over 10 years.
The Fort Worth City Council is expected to vote Dec. 18 on a tax abatement plan that would cover a $23 million expansion and renovation at for-profit HCA's 266-bed Plaza Medical Center of Fort Worth. The hospital is not seeking to cut its current taxes but is asking the city to ease taxes on the new construction and the floor-to-ceiling renovations, said Stephen Bernstein, the hospital's president and chief executive officer. The hospital would pay full taxes on the equipment being added, Bernstein said.
Property tax breaks such as the one Plaza Medical Center seeks are not uncommon for cities trying to attract job-creating businesses. The hospital's abatement application said the contractors on the project, which is expected to start in January and be wrapped up in two years, will employ 150 workers. The new space will provide another 147 jobs.
But such tax breaks are not common in healthcare, especially with so many hospitals already tax-exempt because they are not-for-profit. Even for-profit hospitals don't make much use of them. HCA, the nation's largest hospital chain, with 186 hospitals, paid nearly $153 million in property taxes nationally in 2000, and had abatements that totaled just $1.5 million, spokesman Jeff Prescott said.
HCA benefits, however, from a $5 million property tax break that lured the company to move its headquarters from Louisville, Ky., to Nashville in 1995, Prescott said.
Such breaks can influence a new hospital's location, but that consideration is "way down the list of priorities" when choosing a site, Prescott said. "The demographics, and where the growth is, is usually the biggest determining factor," he said. "The other factor is access to land. You've got to have a piece of land that you can get at a reasonable price. And you need access to major arteries for the (emergency room)." Whether a state has a certificate-of-need law is a factor, too, he said.
But even if they are rare, property tax breaks highlight a potential irony of for-profit healthcare. When buying not-for-profit hospitals, for-profit providers often cite the property and other taxes they will pay as one of the benefits they can bring to a community. Not-for-profit hospitals, exempt from such taxes, do not contribute to local coffers, the for-profit companies say. Essent Healthcare, a small start-up hospital company in Nashville, made that point in local newspapers in August when it purchased 129-bed Hale Hospital, Haverhill, Mass. And HCA, when it was known as Columbia/HCA Healthcare Corp., considered taxes paid to be on a par with charity care in determining community benefits.
These days, HCA downplays the differences between for-profit and not-for-profit providers. "For-profit, not-for-profit-the reality is, hospitals look a lot alike, because healthcare is healthcare, and it's delivered in much the same way wherever you go," Prescott said. "We haven't made a big deal about it for several years."
Tenet Healthcare Corp. spokesman Harry Anderson said the Santa Barbara, Calif.-based company, which is the nation's second-largest for-profit hospital company with 114 hospitals, has been the recipient of just a few such tax breaks. The most prominent is in Philadelphia, where the company sought relief after its $345 million purchase of eight bankrupt hospitals in 1998 from the Allegheny Health, Education and Research Foundation. Anderson added that most abatements are for brand-new hospitals from providers moving into a community, rather than for an existing hospital's expansion.
Prescott said HCA investigates the chances of property tax relief whenever it contemplates capital projects. "That's normally part of what you consider," he said. "It's not always done, but it's not uncommon."
Like many landowners, both HCA and Tenet also employ another strategy to reduce their property taxes-appealing the values of their hospitals as set by local property assessors (Feb. 14, 2000, p. 16).