Montana Bill Would Remove Property Tax Exemption from Hospitals

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February 7, 2011; Source: Flathead Beacon | A bill submitted this year to the Montana legislature proposes to eliminate the property tax exemption for nonprofit hospitals as well as other nonprofit health care providers. Rep. Keith Regier who submitted the bill had two reasons for sponsoring it.

First, he argues, the hospitals use public services as much as any individual homeowner or business, and second, the hospitals have added services like pharmacies, health club facilities and doctor’s practices, that bring them into direct competition with the business sector, thus eliminating any distinction. The nonprofit hospitals, of course, argue that they provide public benefit in free care.

While the bill would, according to Regier, produce $2 million in taxes overall, just one of the providers, Northwest Healthcare, provided $4 million in free care last year. Some of what seems to be an undercurrent in the discussion is a growing resentment over the increased monopolization of health care services by big hospital systems.

While the bill has been tabled, effectively killing it for this session, nonprofit healthcare providers may need to consider whether the effort might find more support in the future. Regier hails from Kalispell, Mont., where in 2008 local pharmacists protested Northwest Healthcare’s opening of a pharmacy. Northwest has also built a large athletic club in the area, and in testimony before the legislature, a smaller club owner in the area called it’s property tax exemption an “unfair advantage that the nonprofits hold over private enterprise.”

The CEO of Flathead Orthopedics, Adele Rittmueller, says it will be important for the public to discuss the increasing influence of large health providers, saying that her operation is “one of the few specialty groups left” in the area to remain unaffiliated with the hospital.—Ruth McCambridge