California Legislature Seeks More Charity Care from Nonprofit Hospitals

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March 20, 2014; California Healthline


The California Legislature is considering two bills that call for stricter guidelines over the amount of charity care nonprofit hospitals must provide in order to maintain their tax-exempt status, according to California Healthline, an online service of the California Healthcare Foundation.

The bills are based on a charity bill that failed to advance last year, which would have increased the level of charity care nonprofit hospitals and acute care facilities must provide while tightening reporting requirements. Current California law requires nonprofit hospitals to submit community needs assessments every three years to prove that the public is benefiting from their tax-exempt status.

Naturally, hospitals opposed the legislation, while several labor unions endorsed it. Assembly member Richard Pan, a physician, introduced AB 1952, which require nonprofit hospitals to spend 5 percent of their revenue on charity care.  Another bill by Assembly member Bob Wieckowski, AB 503, would create uniform community benefits requirements targeting vulnerable populations.

“Taxpayers are providing these hospitals with almost $2 billion in tax benefits and yet there is no system in place with a standard method to calculate the amount of community benefits.” Wieckowski said.

The California Hospital Association opposes both new measures. Further, California’s finance director said that stricter charity care regulations could deprive the state of tens of millions of dollars in tax revenue.—Larry Kaplan