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August 21, 2012 > Corbett calls for greater scrutiny of non-profit hospitals

Corbett calls for greater scrutiny of non-profit hospitals

Submitted By Andrew LaMar

Senate Majority Leader Ellen M. Corbett (D-San Leandro) is calling for greater scrutiny of non-profit hospitals following a state audit's revelation that there is no defined amount of community benefits hospitals must deliver to obtain tax-exempt status.

The audit, requested by Corbett in 2011, was released just a few days before a hearing of the Select Committee on Charity Care and Non-profit Hospitals which will discuss the issues raised at 10 a.m. on Wednesday, August 15, 2012 in state Capitol Room 3191.

"Communities across California are served by non-profit hospitals and we must ensure they are honoring their commitment to serve the public that comes with their special tax-exempt status," Corbett said. "This audit makes clear there are no uniform standards or requirements for non-profit hospitals when it comes to charitable care."

Hospitals receive non-profit status, and the benefit of not paying taxes, due to their commitment to provide charitable care. Many non-profit hospitals make a significant effort to honor that mission but questions have arisen as to whether others do not.

Non-profit hospitals have come under increasing investigation in recent years, with the Internal Revenue Service, the California Franchise Tax Board and the California Board of Equalization taking a closer look at whether they fulfill their responsibilities and if the tax trade-off is merited.

The audit, released on August 9, 2012, made several key findings. Neither federal nor state law requires non-profit hospitals to deliver a specific amount of community benefits to qualify for tax exemptions, and, there is no standard methodology for calculating the costs associated with uncompensated care. Each of the hospitals reviewed used different methods to calculate and report the cost of uncompensated healthcare services.

To view the audit, visit For more information, visit

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