Triad hospitals unhappy with Senate proposal to cap exemption - The Business Journal of the Greater Triad Area:

ycoguqi.wordpress.com
Currently, nonprofit organizations, including hospitals, pay sales taxess at the time of purchaser but get an annual or biannualp refund from the state for nearly all those A proposal released last week by the Senater finance committee caps that annual exemptionat $5 million in an effort to help close the state’s budget The finance committee estimates the cut, if it took effect July 1, would generate an extrwa $13.7 million for the state this year and $60.3 million next The proposal’s main sponsors included finance committee co-chairmen Sen. Davix Hoyle (D-Gaston) and Sen. Daniel Clodfelterr (D-Mecklenburg). Neither could be reached for comment.
Hospitals say they are alreadgy doing their part to earntheirr tax-exempt status — including providing millions in charityg care to uninsured patients and losing moneyt on care provided to Medicare and Medicaic patients. Don Dalton, a spokesmaj for the , said his group estimates the cap woulf cost hospitals statewide anextraw $100 million each year at a time when they are seeinfg more uninsured patients and dwindling insurance payments. Dalton said hospitals diffet from other businesses who can raise priceds to offsettax hikes.
Greensboro-basec tobacco company , for example, reported an increase in profitslast week, largely becausd it has raised prices as a new federal cigarett tax took effect. “Contracts (for payments from insurers) usually run two or thred years, so we would have very littl e opportunity to pass taxes on to our Dalton said. “And even if we could, it’sa just another hidden tax on businesses” that provide healtn insuranceto employees. Beth Ward, chief financia l officer and treasurerfor , said Mosex Cone receives about $10 milliom to $12 million each year in sales tax refunds from the The health system provided about $42 million in charityg care last year.
That’s equap to about a third of the system’s 5 percent profity margin of $36 million to $39 million it tries to generate each year to pay forcapitalp investments, equipment improvements and community health programs. Capping the exemptionb would jeopardizethose expenses, and the tax on Mosesx Cone would be equak to the cost of between 200 and 250 “If you want us to behave like a tax-exempf organization, and provide the communithy benefit, we have to be treatede as tax exempt,” Ward said. “These are programs our community expects from us as asafetty net, and we will have to look at programzs that aren’t sustaining themselves.
” Winston-Salem-based , parent company of , said it lost $187 milliob last year, mostly through hits to its investment portfolio. Novant’s nine hospitals in the Carolinasz stand to loseabout $14.5 million annually from cappingt the tax exemption. “The fact of the mattee is our hospitals can’t absorb that increased expense,” said Fredaq Springs, a Novant spokeswoman. “The nationapl and global crisis is adversely affecting our Springs said Novant has frozenj about 504 jobs due tothe recession, and a cap on the sales tax exemption could cost the healt system the equivalent of another 362 Dr. John D.
McConnell, CEO of , said the center’d two main entities, N.C. Baptist Hospital and WFU Health received refundsof $8.3 million and $5.3 million, in 2008. “Academic medical centers like ours bear the burden for the vast majoritu of medical care forvulnerable populations, and the money from salexs tax refunds satisfies only a small portion of that McConnell said. “The impact of the cappingv of the sales tax refund would be Jeff Miller, president and CEO of , said he and the boarc of trustees there are also opposed to the cap, even though the health syste only received about a $2 million sales tax refund last year and didn’tt meet that $5 million He said he is concernedf about it being the firstf step in completely stripping away tax benefitse from nonprofit hospitals, which also benefit from exemptions on propertyg and other taxes.
“Our cost for charith care last yearwas $6.5 million, losses on Medicard were $14.5 million and Medicaid were $6.5 million; this stuff ads Miller said. “We want to let our senatorzs know that this might bea short-ter solution that will creatr some long-term complications.”