Bill Would Require Tennessee Hospitals to Pay for Tax-Exempt Status with Charity Care

To ensure that not-for-profit hospitals in Tennessee provide "enough" charity care, new legislation (SB 819) introduced in the state Senate would require hospitals to provide charity care "equal" to the benefit they receive from their tax-exempt status, the Chattanooga Times & Free Press reports. Under the proposal, not-for-profit hospitals that do not provide charity care equal to their tax breaks would be required to pay the difference. State Sen. David Fowler (R), who sponsored the bill, said, "The whole idea of granting nonprofit status is that the nonprofit entity will return more benefit to the community than what the community would have gotten out through taxation. This bill is an attempt to measure what is being returned to the community." Under the legislation, money from private tax-exempt hospitals that do not provide enough care would go to public facilities that "bear the majority of the uncompensated care burden." For example, the Times & Free Press reports, in Chattanooga, Erlanger Hospital, which is public, provides more than three times the amount of charity care Memorial Hospital, a private, tax-exempt facility, provides. But Clark Taylor, CEO of Memorial Hospital, said public facilities should "expect" to provide more charity care. He said, "I think that all hospitals should provide charity care. But publicly supported hospitals will provide the most charity care because of their public support, and private hospitals would provide the least. Memorial is committed to providing charity care because we're a ministry." He added that the bill's concept sounded a "little strange," but would withhold judgement until reviewing the details (Fortune, Chattanooga Times & Free Press, 2/5).