Hospitals to stay tax-exempt, Charleston mayor assures
03/25/2013 - Charleston Gazette
CHARLESTON, W.Va. - Mayor Danny Jones has no intentions of asking hospitals to give up their tax-exempt status and pay local taxes, even though it would mean millions in additional city funds.
"That won't happen here," Jones said. "[CAMC] is a charity hospital. They're a nonprofit and they do a lot of charity work -- millions and millions of dollars.
"They're not going to go for-profit."
Last week, Pittsburgh Mayor Luke Ravenstahl made headlines when he announced his intentions to challenge the tax-exempt status of the University of Pittsburgh Medical Center. He argued that the hospital had not been operating like a charity, according to media reports.
Jones said he's satisfied with the hospitals' current tax-exempt status and has no intention of asking them to change. CAMC and Saint Francis are nonprofit hospitals.
"I'm not going to pass judgment [on the Pittsburgh mayor]," Jones said. "I'm sure he's a very smart young man, but you put them into for-profit status and I'm not sure how much charity work they'd be willing to do."
CAMC brings in about $830 million in revenue each year, said Larry Hudson, the hospital's chief financial officer.
Last year, the hospital lost $65 million in charity care and another $65 million in bad debt -- all for treating people who couldn't afford treatment, Hudson said.
Fourteen percent of CAMC's expenses are spent on the community in one way or another, Hudson said. Much of that amount is spent caring for patients who cannot afford to pay. Part also is spent treating Medicaid and Medicare patients. It often costs a hospital more to treat a Medicaid or Medicare patient than the reimbursement the hospital gets for the patient's treatment.
Hudson said 5 percent is a common amount for a hospital to spend on community benefit.
The high percentage is a reflection of the hospital's contribution to the community, he said.
"In return for the tax-exempt status, we give back to the community in the form of charity care," Hudson said. "We also take any and all Medicaid patients and incur the losses associated with Medicaid patients."
Local hospitals do pay a state sales tax and a federal Medicare provider tax.
If CAMC were to pay city taxes, Jones said, the amount would be significant.
"It would be in the multimillions," he said. "But they wouldn't have grown like they have. Being a nonprofit, people can donate money. They're building a cancer center because people are able to donate money and deduct that from income taxes."
Before South Charleston's Thomas Memorial bought Saint Francis in 2007, it operated as a for-profit hospital and paid local taxes, Jones said. When Thomas Memorial took it over, the city of Charleston took a $1 million per year hit to its tax revenue, Jones said.
"We've grown our way past it, but it's significant," he said. "It's a million bucks."
The amount of charity care and bad debt for Saint Francis was not available from the hospital's accounting department Friday afternoon, spokeswoman Paige Johnson said.
Saint Francis' sister hospital, Thomas Memorial in South Charleston, had a shortfall of $6.5 million for treating Medicaid and Medicare patients, wrote off $4.2 million in charity care and another $16 million in bad debt last year.