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August 11, 2010; Source: Modern Healthcare | We could probably post stories about challenges to nonprofit property tax exemptions on an hourly basis. This one is from Wauwatosa, Wisc., where an appeals court decided that the outpatient center of the Wheaton Franciscan Healthcare-St. Joseph Hospital operates like a for-profit doctor’s office rather than a nonprofit hospital.

The fight is over $2.9 million in contested property taxes. The lower courts had ruled that the services at the clinic, including outpatient surgery and urgent care, qualified the Center as a component of the nonprofit hospital. The appeals court found that the absence of inpatient care, the presence of office space for doctors, and that the majority of patients were being treated by appointment during business hours made the clinic more like a doctor’s office than a hospital department.

The issue at hand of course is the nonprofit content of nonprofit hospitals. As the appeals court noted, “The evolution of healthcare delivery is making it increasingly difficult to make . . . distinctions” between nonprofit and for-profit health care. That problem will increase after national health reform kicks in, as many of the charity care functions of nonprofit hospitals get alleviated by the hoped-for provision of universal coverage.—Rick Cohen