Montana’s Tax-Exempt Hospitals Oppose Increased Oversight by State Officials

by | Feb 13, 2023 | Health

Nonprofit hospitals are fighting Montana’s attempt to boost oversight of the ways they claim they provide benefits to their communities in exchange for millions of dollars in tax breaks.

It’s the latest clash in a national struggle between policymakers and the industry over whether hospitals’ charitable giving is enough to justify their tax-exempt status.

Montana Department of Public Health and Human Services officials have asked state lawmakers to pass a bill authorizing the agency to create standards and reporting requirements for the community benefits nonprofit hospitals report, saying the information collected now is insufficient. Montana hospitals get state and federal tax breaks each year with little oversight of how that’s earned.

The Montana Hospital Association opposes the bill despite initially saying it would support the measure if it didn’t conflict with federal rules. Now, the association is seeking changes to the bill that state officials said would actually shrink the department’s oversight, gutting the bill of its original purpose.

The Montana debate illustrates a power struggle playing out nationally between state policymakers who want more of a watchdog role and tax-exempt hospitals resistant to added oversight, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University who studies hospital giving.

“There is a question of whether they are nonprofits or for-profit in disguise,” Bai said. “The fundamental issue is the contract between taxpayers and nonprofit hospitals. We’re witnessing a national trend that this contract has been overlooked for a long time.”

More than half of acute care hospitals in the United States are nonprofit hospitals, which must record community benefits — such as covering a patient’s bill or offe …

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