The CEO of New Jersey's largest hospital system has come out in support of not-for-profit hospitals in the state paying some property taxes, NJ.com has reported.
"I do think there should be some approach, some way for those of us who manage not-for-profit assets, to make sure that we are not only contributing to our community in healthcare and human services, but contributing to our community financially," Barnabas Health System CEO Barry Ostrowsky told NJ.com.
In New Jersey, hospital officials and legislative leaders have been suggesting that acute care facilities may be willing to pay some forms of property taxes, following an adverse ruling earlier this year against Morristown Medical Center in state tax court.
"I wouldn't want the full impact of the Morristown case to prevail statewide because that would mean many dollars of property tax that we're not used to paying, but I also don't think that the answer is zero, to be honest," Ostrowsky said.
Barnabas is currently merging with Robert Wood Johnson Healthcare, creating a 14-hospital system within the Garden State.
Not-for-profit hospitals are coming under some pressure to pay property and other taxes, igniting a debate as to how far such facilities should go on the issue. However, the actual loss of exemptions has been extremely rare. Aside from the Morristown case, Provena Health in Illinois is one of the few other hospital operators to lose a property tax exemption--and that occurred nearly a decade ago.
Leonard Grunstein, a partner with Hanlen Healthcare Development and Funding, a New Jersey-based private equity firm, argued in Crain's New York Business that the modern hospital "may do some charity work, but in reality it is a moneymaking business." As examples, he noted the $250 million profit recently reported by New York Presbyterian Medical Center, income-generating businesses such as ambulatory surgical centers and insurance coverage offered by New York and New Jersey hospitals, and the seven-figure salaries paid to many of its top executives.
"In light of all this, isn't it about time for the government to review the tax status of these hospital systems?" Grunstein asked. "A hospital making a profit, even if denominated as a nonprofit, should at least pay real estate taxes. Indeed, why not impose an income tax on these profits to reimburse the public, in part, for the subsidies government provides that help to generate the profits?"