But local Pitts­burgh pol­i­tics aside, large non-​​profit health sys­tems are get­ting new atten­tion from city and state tax offi­cials across the country facing budget crises. “The fact is hos­pi­tals are coming under more scrutiny,” says Gary Young, director of North­eastern University’s Center for Health Policy and Health­care Research. “The city’s will­ing­ness to take on a hos­pital with the cachet that UPMC has is sending a chill down the spines of many hos­pi­tals around the country who are saying, ‘If this is hap­pening in Pitts­burgh, what could happen with us?’”

The require­ments to be a tax-​​exempt non-​​profit in Penn­syl­vania are tougher to meet than in many other states, but gen­er­ally, health care sys­tems must have a char­i­table mis­sion and ben­efit the local com­mu­nity. In exchange, they are effec­tively sub­si­dized by tax­payers. Under the Afford­able Care Act (ACA), begin­ning next year, hos­pi­tals that are exempt from fed­eral taxes must develop and submit to the Internal Rev­enue Ser­vice detailed assess­ments of the health care needs of their local com­mu­ni­ties, along with plans to help meet those needs. Young is the lead author of a paper pub­lished in the New Eng­land Journal of Med­i­cine in April 2013 that found that in 2009, tax-​​exempt hos­pi­tals spent just 7.5 per­cent of their oper­ating expenses on com­mu­nity ben­e­fits. “We are, to some degree, moving into a new era in terms of some of the expec­ta­tions we have for hos­pi­tals that have tax exempt status,” says Young. “Pitts­burgh could be a water­shed event.”

 

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