On October 30, 2007, the Senate Finance Committee held a “Non-Profit Hospital Roundtable” to discuss issues affecting non-profit hospitals and specifically discuss the recommendations made by the Senate Finance Committee minority discussion draft released in July. On the roundtable participant list were several non-profit hospital representatives, a representative from the American Hospital Association, and other consultants, lawyers and policy makers.
Senator Charles Grassley (R-IA), ranking minority member of the Senate Finance Committee, appeared and provided remarks to the roundtable. Grassley’s remarks included comments on the following matters:
Grassley stated he was not sure yet if new legislation was needed to govern non-profit hospitals: “…I haven’t made any decisions about whether legislation is necessary to address the issues we’ve seen regarding non-profit hospitals, but I hope today’s roundtable will bring a better understanding of what are possible solutions. My hope remains that much can be accomplished with volunteer work.”
Grassley said he was worried that many nonprofit hospitals may not “do the right” thing on their own: “The leadership of CHA has shown me that some hospitals can do the right thing on their own initiative. The question is, can they bring along all the nonprofit hospitals to do the right thing? I am very worried that the answer may be no.”
Grassley criticized hospitals for suggesting changes/delays to the proposed Schedule H: “To me an early test is the recent Schedule H of the Form 990 that the IRS recently put out for comment. The Schedule H finally gets real information to the public and policy makers about tax-exempt hospitals. This new Schedule H is a dramatic improvement over business-as-usual … and has led the IRS’ efforts to bring real sunshine and transparency. However, while everyone talks about the need for sunshine, there are a few tax-exempt hospitals in the shadows that are bent on pulling the blinds and closing the drapes. It is disgraceful that they are misleading Congress in efforts to try and get the Schedule H watered down and delayed. If these hospitals continue to press for keeping the public in the dark about how they justify $50 billion in tax breaks a year, that will greatly color my views about the need for legislation.
Grassley reiterated the suggestion that he is not sure what non-profit hospitals provide in return for their tax-exemption: “We spend a lot of time in this Congress talking about new spending and new tax breaks. But we spend very little time looking at how that spending is being used – whether it’s being spent effectively or wasted. And unfortunately, we spend almost no time looking at tax breaks – in the case of nonprofit hospitals, billions of dollars each year – and seeing what we are getting for all these big tax breaks.”
The AHA offered prepared remarks warning that the proposed changes to the hospital community benefit standard presented in a minority staff discussion draft were “problematic” and that “an arbitrary charity care threshold, such as the one in the minority draft, would not fully promote the kind of care communities need.” The AHA comments specifically identified as problematic the recommendation that would require non-profit hospitals to dedicate at least 5% of their operating expenses to charity care to maintain tax exempt status. It was noted that many hospitals will not meet the rigid standard but provide critical community benefit of other varieties. The AHA that: “We are very concerned that the imposition of a rigid threshold for charity care as a condition for tax exemption will not capture the many contributions that hospitals make to those they serve. Charity care is one very important component of what hospitals do for their communities. Recognizing and supporting the other myriad benefits that hospitals supply is critical as well.” The AHA went on to note that “Statistics released last week show that in 2006 alone, hospitals provided more than $31 billion in uncompensated care and nearly $30 billion more to cover Medicare and Medicaid shortfalls, based on the cost of care, not charges” as well as “countless billions more in benefits” of other types.