Thursday, November 7, 2019

UPMC Denied Property Tax Exemption on County Hospitals

Pennsylvania bears watching on hospitals and tax exemption.

Pennsylvania's Northumberland County Board of Assessment just denied a request on October 30 for property tax exemption for some hospitals UPMC acquired a few years ago. UPMC, headquartered in Pittsburgh in the old US Steel building, bought Susquehanna’s Sunbury and Lock Haven hospitals from for-profit Quorum Health in 2016. 

Apparently no specific reason was sited for the denial. From the article:

“There was testimony during the hearing that indicated that some parcels, or portions of the parcels, were utilized for purposes that likely are not exempt. UPMC felt all of the parcels were exempt,” Mr. Garrigan wrote in an email.

“When questioned by the Board, UPMC gave an indication as to the approximate breakdown of the parcels by use, but there was little documentary evidence provided at that time to backup these percentages.”

UPMC has 30 days to appeal.

The healthcare giant recently entered into a 10 year agreement with Highmark for Highmark to be allowed to use the UPMC provider network. This came on the heels of the Pennsylvania AG bringing a complaint sounding in state charitable nonprofit law to force UPMC to enter into such a relationship with Highmark.

Philip Hackney

https://lawprofessors.typepad.com/nonprofit/2019/11/upmc-denied-property-tax-exemption-on-county-hospitals.html

Current Affairs, In the News, State – Executive | Permalink

Comments

I have been following UPMC and Pennsylvania charitable issues casually for several years. One key sticking point is the use of the word "exclusively" when referring to charitable and activities eligible for state tax exemption. Technically, therefore, any charity or facility operated by a charity that had *any* noncharitable component would fail the state's exemption test.

In practice, it might make sense to agree on a percentage of noncharitable activity and agree to pay property taxes on that portion of the real estate value. For example, a hospital's membership-based health club ("wellness center") is used 93% by the general public in competition with similar health clubs, while 7% of use is for medical rehabilitation services. The facility would enjoy a 7% exemption and pay on 93% of the assessed value.

Posted by: Michael L. Wyland | Nov 8, 2019 10:36:39 AM

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