Montana well being officers are proposing to supervise and set requirements for the charitable contributions that nonprofit hospitals make of their communities every year to justify their entry to tens of millions of {dollars} in tax exemptions.
The proposal is a part of a bundle of laws that the state Division of Public Well being and Human Providers will ask lawmakers to approve after they convene in January. It comes two years after a state audit referred to as on the division to play extra of a watchdog function and 9 months after a KHN investigation discovered a few of Montana’s wealthiest hospitals lag behind state and nationwide averages in neighborhood giving.
Montana state Sen. Bob Keenan, a Republican who has questioned whether or not nonprofit hospitals deserve their charity standing, mentioned the proposal is a begin that may very well be expanded on later.
“Transparency is the secret right here,” Keenan mentioned.
The IRS requires nonprofit hospitals to tally what they spend to “promote well being” to learn “the neighborhood as an entire.” How hospitals depend such contributions to justify their tax exemptions is opaque and varies extensively. Nationwide researchers who research neighborhood advantages have referred to as for tightening requirements for what counts towards the requirement.
Montana is likely one of the most up-to-date states to think about imposing new guidelines or growing oversight of nonprofit hospitals amid questions on whether or not they pay their fair proportion. Dr. Vikas Saini, president of the nationwide healthcare suppose tank Lown Institute, mentioned that each at a state and native stage, individuals in California are exploring whether or not to observe hospital neighborhood advantages and implement new requirements. Final 12 months, Oregon initiated a minimal quantity that nonprofit hospitals should spend on neighborhood advantages. And Massachusetts up to date its neighborhood advantages pointers lately, pushing hospitals to present extra detailed assessments of how the spending strains up with recognized well being wants.
Montana hospital business officers mentioned they wish to work with the state to form the proposed laws, which they mentioned the business would help if it doesn’t battle with federal guidelines. Saini mentioned that to have an effect, any laws must transcend federal necessities.
Lately, extra individuals, like Keenan and Saini, have questioned whether or not nonprofit hospitals are contributing sufficient to their communities to deserve the foremost tax breaks they get whereas turning into a number of the largest companies on the town.
“The hospitals are type of the pillars of communities, however individuals are beginning to ask these questions,” Saini mentioned.
Saini’s institute critiques hospitals’ giving every year and has discovered that almost all of nonprofit programs nationwide spend much less on what the institute calls “significant” advantages than the estimated worth of their tax breaks. Actions the institute counts embrace affected person monetary assist and neighborhood investments akin to meals help, well being schooling, or providers provided at a loss, together with dependancy remedy.
The 2020 Montana audit discovered that hospitals within the state report advantages vaguely and inconsistently, making it tough to find out whether or not their charity standing is justified. Nonetheless, state lawmakers didn’t handle the difficulty of their 2021 biennial legislative session, and a Legislative Audit Division memorandum issued in June discovered the state well being division had “made no significant progress” towards growing oversight of nonprofit hospitals’ charitable giving since then.
KHN discovered that Montana’s practically 50 nonprofit hospitals directed roughly 8% of their whole annual bills, on common, towards neighborhood advantages within the tax 12 months that resulted in 2019. The nationwide common was 10%.
In some circumstances, hospitals’ giving percentages have declined since then. For instance, within the tax 12 months that resulted in 2019, Logan Well being-Whitefish — a small hospital that’s a part of the bigger Flathead Valley well being system — reported that lower than 2% of its general spending went towards neighborhood advantages. In its newest obtainable paperwork, for the interval ending in 2021, the hospital reported spending lower than 1% of its bills on neighborhood advantages whereas it made $15 million greater than it spent.
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Logan Well being spokesperson Mellody Sharpton mentioned the medical system’s general neighborhood profit is the same as practically 9% of its spending, reaching throughout its six hospitals. It additionally has clinics all through the valley. “It’s essential to think about our group’s neighborhood profit as an entire as our services collaborate to make sure the suitable care is offered on the acceptable facility to satisfy our sufferers’ well being wants,” Sharpton mentioned.
State well being officers requested lawmakers to permit the company to draft a invoice that will give the well being division clear authority to require hospitals to submit annual reviews that embrace neighborhood profit and charity care knowledge. The measure additionally would permit the division to develop requirements for that neighborhood profit spending, based on the division’s description of its proposal.
“We see an important want right here to maneuver the ball ahead,” state well being division chief Charlie Brereton informed lawmakers in August.
Montana Hospital Affiliation President Wealthy Rasmussen mentioned his group needs to work with the well being division in honing the laws however mentioned the definition of what counts as advantages ought to stay broad so hospitals can reply to their space’s most urgent wants.
Moreover, he mentioned, hospitals are already engaged on their very own reporting requirements. This 12 months, the affiliation created a handbook for members and set a 2023 objective for hospitals to uniformly report their neighborhood advantages, Rasmussen mentioned. The affiliation declined to supply a duplicate of the handbook, saying it will be obtainable to the general public as soon as hospitals are skilled on how you can use it later this fall.
The affiliation additionally plans to create a web site that can function a one-stop store for individuals who wish to know the way hospitals are reporting neighborhood advantages and addressing native well being considerations, amongst different issues.
Republican state Rep. Jane Gillette mentioned she helps elevated well being division oversight and the concept behind the affiliation’s web site however doesn’t suppose the hospital business ought to produce that public useful resource alone. Gillette mentioned she plans to introduce laws to require hospitals to report neighborhood advantages knowledge to a bunch outdoors the business — such because the state — which might then put up the knowledge on-line.
Prior to now, hospitals have resisted makes an attempt to impose new guidelines on neighborhood profit spending. In an interview with KHN final 12 months, Jason Smith, then Bozeman Well being’s chief development officer, mentioned the system supported efforts to enhance reporting contributions “outdoors of recent laws,” including that hospitals can do higher work with out “state oversight our bodies being positioned within the area with us.”
Requested whether or not the well being system nonetheless stands by that assertion, Denise Juneau, Bozeman Well being’s chief authorities and neighborhood affairs officer, mentioned hospital officers hope any new laws will align with current federal pointers. She mentioned Bozeman Well being will proceed to work with the Montana Hospital Affiliation to outline and supply higher neighborhood profit data, with or with out new laws.
A lawmaker must again the state’s proposal by mid-December to maintain it alive.
Kaiser Well being Information is a nationwide well being coverage information service. It’s an editorially unbiased program of the Henry J. Kaiser Household Basis which isn’t affiliated with Kaiser Permanente.
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