Association Claims Charity Care Standards Could Hurt Nonprofit Hospitals 

On June 1, 2009, the Senate Finance Committee released a comment letter from the Association for Healthcare Philanthropy (“AHP”). The letter stressed that requiring non-profit hospitals to meet minimum charity care benchmarks could increase the financial challenges surrounding these facilities. The charity care benchmarks are part of a financial comprehensive healthcare reform proposed by Senators Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa). The proposed reform would codify organizational and operational requirements for determining whether a hospital is eligible for exemption under the Internal Revenue Code Section 501(c)(3). The AHP letter highlights that the policy options considered by Senators Baucus and Grassley put too much emphasis on charity care, while ignoring that most non-profit hospitals’ services extend beyond charity care to include community benefit programs and services, as well as capital and technology improvements. In addition, AHP noted that limiting the tax rate for itemized deductions will cause financial strain on non-profits. AHP stresses that this would devalue charitable gifts and may severely limit the amount of substantial donations made to these hospitals. Charitable gifts are vital to the survival of non-profit hospitals and reducing tax deductions would impair the financial future of these hospitals.