If President Obama wants to squeeze billions of dollars from (healthcare) spending, as Associated Press reports(July 1), he could begin by administering a dose of fiscal reality to for-profit hospitals masquerading as charitable institutions.
Such hospitals are getting tax exemptions because they are providing charitable care---free care or deeply discounted care---for those who cant pay, writes law school dean Lawrence Velvel. The problem, though, is that theyre not providing very much charitable care.
Velvel points to Chicagos Northwestern Memorial Hospital as a case in point. It is exempt from about $50-million in property and sales taxes and exempt from taxes on the gains of its cash and investments of $1.82-billion. But the percentage of charitable care Northwestern provides is less than two percent of its revenues, writes Velvel, dean of the Massachusetts School of Law at Andover. Indeed, the $21 million Northwestern spends on charitable care is, according to the Wall Street Journal, but a fraction of what it received in tax breaks.