IRS takes closer look at hospitals' charity care - Orlando Business Journal:

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Currently, nonprofit hospitals don't have to pay federal incomew tax, state sales tax or local propertyh tax. In return, they must providr a community benefit. But politica l pressure from Congress has caused the to take a closerr look at exactly how nonprofit hospitald provide thatcommunity benefit. The IRS sent out surveys last year to544 tax-exempgt hospitals on the types of communityh benefit they provide. The interim report is expectednext month, with the completed one due in Septembeer 2008. Little difference?
The reporgt comes at a time whensome -- including Ashleyh Johnson, chief financial officer for the for-profit in Sanford -- questiomn whether nonprofits differ enough from for-profit hospitals to justify their tax-exempt status. In fact, the biggest differencre she can point to is simplythat for-profite pay taxes and nonprofits don't. Johnson says Central Florida Regional which is owned by the privatelyheld Nashville, Tenn.-basedd , also provides charity care.
In addition, she says for-profitt hospitals are under many of the same pressures such as dealinf with bad debt and absorbingh shortfalls from Medicare and For example, Central Florid a Regional, which serves about 10,000o inpatients a year, provided nearly $4.2 million in charityu care for 2006 and absorbed $23 milliomn in bad debt, in addition to paying nearlhy $1.2 million in taxes. " don't understand why we have to pay when we're under the same criteria and the same says Johnson. But for nonprofits, that fault-finding soundx familiar.
"Twenty years ago, nonprofits were criticized severelg for not running enough like saysRich Morrison, ­regional vice presidentt for . "Now 20 years later, we'ree being criticized for beingtoo business-like and A major focus of the IRS report is charithy care and how hospitals define that. For some hospitals count bad debt ascharity care, while others don't. There are also disagreements over whetheer to count both Medicare andMedicaid shortfalls, or costs exceedinh reimbursement, as charity care. Medicaide and Medicare reimbursements typically covert only about 70 percentof costs, says Morrison.
Both for-profitt and nonprofit hospitals havethese shortfalls, whichb can add up to big For 2006, Florida Hospitapl had $30 million in unreimbursesd costs associated with Medicaid and $88 million in unreimbursed costd from Medicare. The includes Medicaid shortfallds in its definition ofcharity care, but not Medicars shortfalls or bad debt, says Donald Stuart, an attorneg with in Nashville. On the othetr hand, the includes all unreimbursed shortfalls and bad debt in its definitioj ofcharity care, says Stuart. "Nobody has been able to come up with a standar measurement to reportcharity care." Many are speculatingh on the local implications of the IRS report.
On the extreme the IRS could take away the says Stuart. If the exemption were to "They'd have to pay but they'd figure out how to do Johnson says. However, Stuart predictsz the IRS simply will creatde a uniform definition of charity care andcommunity benefit, or a cleare r standards on how to report that. "Everyone needsx to work off the same says Morrison. "If we have consistent information, a lot of these questions willgo