Montana health officials are looking to increase oversight of nonprofit hospitals amid debate over whether they pay their fair share. It comes nine months after some of Montana’s richest hospitals were found to lag state and national averages in giving to their communities.

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Lynn Donaldson/Bloomberg via Getty Images

Montana health officials are looking to increase oversight of nonprofit hospitals amid debate over whether they pay their fair share. It comes nine months after some of Montana’s richest hospitals were found to lag state and national averages in giving to their communities.

Lynn Donaldson/Bloomberg via Getty Images

Montana health officials propose to monitor and set standards for charitable donations nonprofit hospitals make annually in communities to justify access to millions of dollars in tax exemptions .

The proposal is part of a series of bills that the state’s Department of Public Health and Human Services will ask lawmakers to approve in January. Two years after a state audit called for the department to step up its oversight role, a KHN study found that some of Montana’s wealthiest hospitals fell behind state and national averages in community giving. This was nine months after it was discovered that

A Call for Greater Transparency in Philanthropic Activities

Montana Senator Bob Keenan, a Republican who has questioned whether nonprofit hospitals deserve charitable status, said the proposal was the start of what could be expanded later. I’m here.

“Transparency is the name of the game here,” says Keenan.

The IRS requires non-profit hospitals to count the amount of money they spend on “health promotion” that benefits “the whole community.” How hospitals calculate such donations to justify tax exemptions is unclear and varies. National researchers who study the interests of local communities are calling for tighter standards of what is covered by the requirements.

Montana is one of the latest states to consider increasing oversight of nonprofit hospitals amid new rules and questions about whether they pay their fair share. is. Dr. Vikas Saini, director of the Lawn Institute, a national medical think tank, said at both the state and local levels, Californians are monitoring the interests of the hospital community and considering whether to implement new standards. Last year, Oregon launched a minimum amount that nonprofit hospitals should spend to benefit their communities. Massachusetts also recently updated its Community Benefits Guidelines, requiring hospitals to conduct more detailed assessments of how spending meets identified medical needs.

Officials in the Montana hospital industry want to work with the state to develop legislation, and say the industry will support it as long as it doesn’t conflict with federal rules. Saini said the law must go beyond federal requirements to have any impact.

Massive tax cuts at stake

In recent years, more and more people, like Keenan and Saini, have questioned whether nonprofit hospitals are serving their communities well enough to deserve big tax cuts while becoming some of the biggest companies in town.

“Hospitals are like pillars of the community, but people are starting to ask these questions,” Saini says.

Saini’s Institute reviews hospital donations annually, and the majority of nonprofits across the country spend less than their estimated tax cuts on what the Institute calls “meaningful” benefits. Actions that the Institute counts include financial aid to patients and investments in communities such as food aid, health education or beleaguered services, including addiction treatment.

A 2020 Montana audit found reports from hospitals in the state to be vague and inconsistent, making it difficult to determine whether charitable status is justified. But legislators didn’t address the issue in the 2021 biennial legislature, and a Legislative Oversight Division memorandum issued in June stated that since then, state health departments have overseen nonprofit hospital charitable donations. I found that I had not made any meaningful progress towards developing it.

KHN found that nearly 50 nonprofit hospitals in Montana directed an average of about 8% of their total annual spending to benefit their communities in the tax year ended 2019. The national average was 10%.

In some cases, hospital donation rates have declined since then. For example, in the tax year ending 2019, Logan Health-Whitefish (a small hospital that is part of the larger Flathead Valley health system) said less than 2% of his overall spending went to benefit the community. reported that it was According to the latest available documents, the hospital reports that he will spend less than 1% of his costs on community benefits for the period through 2021, but more than spending he will spend $15 million. I was earning a lot.

instead of director?

Logan Health spokesperson Melody Sharpton said the health system’s overall community benefits represent nearly 9% of its spending, reaching six hospitals. There are also clinics throughout the valley. “It is important to consider the interests of our organization’s entire community, as our facilities work together to ensure that the right care is provided at the right facility to meet the health needs of our patients.”

State health officials authorize government agencies to create legislation giving health departments clear powers to require hospitals to submit annual reports containing data on community benefits and charity care asked the legislator to do so. The action would also allow the agency to create standards for spending on community benefits, according to the agency’s explanation of its proposal.

State Health Director Charlie Bretton told lawmakers in August:

Montana Hospital Association president Rich Rasmussen says his organization wants to work with the health department to hone the law, but it’s considered a benefit so hospitals can respond to the region’s most pressing needs. It states that the definition of things should be broadly maintained.

Plus, hospitals are already working on their own reporting standards, he said. This year, the association produced a handbook for its members and set a goal for hospitals to uniformly report community benefits by 2023, Rasmussen said. The association declined to provide the handbook, saying it would be made available to the public later this fall once hospitals are trained on how to use it.

The association also plans to create a website that will act as a one-stop shop for people wanting to learn how hospitals report on community benefits, address community health issues, and more.

Republican Rep. Jane Gillette has said she supports greater oversight of the health sector and the ideas behind the association’s website, but believes the hospital industry shouldn’t be the only one generating that public resource. Gillette said he plans to introduce legislation requiring hospitals to report community benefit data to groups outside the industry, such as states.

Hospitals have resisted new rules like this in the past

So far, hospitals have resisted attempts to impose new rules on community welfare spending. In an interview with KHN last year, then-Bozeman Health Chief Progress Officer Jason Smith said the system supports efforts to improve reporting contributions “outside of the new law,” adding that the hospital’s added that it “can do a better job without state oversight agencies in place.” us and arena. ”

When asked if the health system supported that statement, Dennis Junod, Bozeman Health’s chief government officer and chief of community affairs, said hospital officials said the new law is in line with existing federal guidelines. says he wishes to Bozeman Health said it will continue to work with the Montana Hospital Association to define and provide better information about the interests of the community, with or without new legislation.

Legislators have until mid-December to support the state’s proposal in order for it to remain in force.

KHN (Kaiser Health News) is an editorially independent national project in the United States. Kaiser Family Foundation.