For-Profit Hospitals Hold Tax Edge
Posted on: Monday, 31 October 2005, 12:01 CST
By Nichole Monroe Bell, The Charlotte Observer, N.C.
Oct. 30--Four companies are competing for approval to build a hospital in Fort Mill. Today we start an occasional series examining issues that could influence your preference for which company -- Tenet Healthcare, Carolinas HealthCare Systems, Presbyterian Healthcare or Hospital Partners of America -- is chosen.
In later stories, we will look at factors such as cost, quality and community services (indigent care, for example). We start by looking at the tax difference between not-for-profit and for-profit companies. Local leaders agree any hospital will be a boon to the community, but they disagree on whether it is important that the hospital pay taxes.
WHAT'S THE DIFFERENCE? Tenet Healthcare (which owns Rock Hill's Piedmont Medical Center) and Hospital Partners of America are for-profit entities and pay property and corporate income tax. Not-for-profit hospitals such as Presbyterian and Carolinas HealthCare System (which owns Charlotte's Carolinas Medical Center) do not pay those taxes.
WHO SHOULD CARE? Taxpayers in the town of Fort Mill and elsewhere in the Fort Mill school district are most affected. Tenet, Presbyterian and Carolinas Healthcare say they would build inside Fort Mill or within range of annexation. The city would be responsible for expanding services (like police and firefighters) to cover the hospital site. Property taxes could defray those costs and possibly generate more money, town officials say.
The bulk of property taxes collected go to the school district, so it has the most to gain. The property-tax relief a Senate panel proposed last week would not apply to business property.
HOW MUCH IS AT STAKE? Piedmont Medical Center estimates it would pay about $3 million in property taxes each year. More than half -- $1.68 million -- would go to the Fort Mill school district. The rest would go to county and town funds. Hospital Partners of America, which has picked a site outside city limits, estimates it would pay $1.4 million in property taxes.
Carolinas HealthCare Systems and Presbyterian HealthCare would not pay property taxes.
DOES IT MATTER? The S.C. Department of Health and Environmental Control will decide which company's proposal to accept, and spokesman Joel Grice says tax status is not a factor. DHEC's most important factors are community need, accessibility, financial feasibility and the applicant's record of providing health care.
Keith Benson, a Winthrop University healthcare management professor, said patients care most about quality, accessibility and cost.
DHEC, though, says tax status would be factor if it affected the community's preference, as indicated in letters to the department and in the public hearings coming next year.
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THC,
Source: The Charlotte Observer (Charlotte, N.C.)
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