Conn. to consider taxing not-for-profit hospitals

The latest legislative fight over taxing not-for-profit hospitals will play out this week in Connecticut, where the state House may vote on a bill to impose municipal property taxes on currently tax-exempt hospitals and colleges.

That debate is taking place in financially strapped cities, counties and states across the country. In New Hampshire, lawmakers are considering a bill that would extend the state's business enterprise tax to not-for-profits including hospitals. In Pittsburgh, a suit filed by the city last year against UPMC health system demands six years of back payroll taxes while challenging that system's tax-exempt status.

Connecticut is dominated by not-for-profit hospitals. But Tenet Healthcare Corp. and Yale-New Haven Hospital recently partnered to enable Tenet to acquire four not-for-profits and convert them to for-profit status.

The pending legislation could change the calculus for not-for-profit hospital operators in Connecticut by exposing them to local property taxes. Supporters say not-for-profits should help pay for city services they use, while opponents argue that removing tax-exempt status would put jobs and charity care at risk.

Under the Patient Protection and Affordable Care Act, tax-exempt hospitals must conduct a community health needs assessment every three years and implement a plan to serve those needs. A study in the New England Journal of Medicine last April found that not-for-profit hospitals varied widely in the percentage of operating expenses devoted to community benefits, ranging from as much as 20% to as little as 1%.

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