HELENA – Most of Montana’s major hospitals provide charity care and other community benefits in excess of the tax breaks they receive by being nonprofits, but a report released by the attorney general’s office questions whether some hospitals are overstating expenditures they claim are subsidized services.
The report, issued Thursday, was authored by University of Montana professor and former hospital CEO Larry White. It said Montana’s nonprofit hospitals reported almost $195 million in community benefits in 2010 in return for total tax exemptions valued at $58 million.
But it noted Community Medical Center in Missoula, St. Peter’s Hospital in Helena and Bozeman Deaconess included a total of $15 million in subsidized services attributed to hospital-owned physician clinics in their metropolitan areas.
Subsidized health services are those provided, even though they lose money, because they are unavailable elsewhere in the community and can include satellite clinics designed to serve low-income communities, according to IRS and other guidelines.
The report notes the number of hospital-owned clinics are increasing, but says “from the perspective of analyzing the extent to which Montana’s nonprofit hospitals are fulfilling their charitable purposes, the situation concerning subsidized services — and particularly those involving physician clinics — is appropriately a matter of concern and attention.”
St. Peter’s considers its local physicians’ group a subsidized service because a majority of its doctors wouldn’t be in the community without the hospital employing them, spokeswoman Peggy Stebbins told Lee Newspapers of Montana.
Community considers its clinics subsidized because they accept all patients and the hospital essentially subsidizes the cost of physicians providing those services, said Mary Windecker, vice president of planning and marketing.
White’s report notes charity care applications have increased from 27,200 in 2008 to 46,800 in 2010, likely due to increased need for and awareness of the programs. The approval rate for charity applications declined from 93 percent to 90 percent.
Montana’s 10 largest hospitals reported $166 million in community benefits for 2010, a 17 percent increase over the previous year, while the state’s mid-sized hospitals reported $28 million in community benefits in 2010, up 19 percent.
Marcus Daly Memorial Hospital in Hamilton and St. Luke’s Community Hospital in Ronan listed community benefits at less than their tax exemption, the report said.