On the thirty-first, I noted the Illinois decision refusing to provide state tax exemption to Provena Covenant Hospital in Urbana, based on the court's determination that the hospital was not providing public services in return for the tax exemption. Instead, the hospital was known for its heavy-handed bill collection practices and for passing along substantial profits to its corporate parent. You can catch up on some Illinois reporting on the Illinois court decision on NonProfit Tax blog, at this link.
At the same time, the Wall Street Journal ran a substantial story on the woes of other tax-exempt hospitals. There's a good summary on the Non-Profit Law Blog, The Pricing Power of Non-Profit Hospitals. The gist of the story is this: Roanoke Virginia has a major "nonprofit" hospitalk, Carillon, that charges very high prices for various procedures. The hospital administration justifies the charges as a way to subsidize public services, but there is speculation that the lack of competition (you have to go to another city to find any competitor) has led to too-high prices based on near-monopoly conditions. The Journal blog on the issue informs us that the hospital is buying up private medical practices so it can establish a clinic-based approach. But note that means it is also consolidating medical services even further, thus adding to its monopolistic pricing power.
It seems that it is time to reexamine the idea of tax exemption for businesses--executives of such "charities" shouldn't be paid as much as executives in their for-profit competitors, and such "charities" shouldn't be making profits that are otherwise distributed to their owners. There does really need to be a substantial public service as a quid pro quo for the tax exemption.
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