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Bill would tie nonprofit hospitals' community benefit to property-tax-equivalent reporting and direct shortfalls to rural hospitals
Summary
SB 560 would require nonprofit hospitals to report community-benefit spending and compare it to an estimated property-tax-equivalent value; sponsors said shortfalls would fund critical-access hospitals, while hospital systems said amendments are needed to address definitions, appeal rights and accounting for charitable donations.
Sen. Matt Regier told the committee that Senate Bill 560 responds to a 2020 legislative audit that found inconsistent reporting of community benefit by nonprofit hospitals. The bill would require hospitals to report community-benefit spending, compare that benefit to an estimated property-tax liability, and, if a hospital falls short, remit the difference to the Department of Public Health and Human Services for distribution to critical access hospitals that are unaffiliated and at financial risk.
Hospital associations and health systems opposed aspects of the bill as originally drafted but said they would support the measure with amendments that add definitions, account for charitable donations, and provide an appeals process for Department of Revenue estimates. "We do support the bill, as amended, if those amendments are put on," said Duane Pressinger of the Montana Hospital Association. Billings Clinic/Logan Health and Intermountain Health described high levels of community benefit already provided and asked that certain categories be clarified in statute or rules.
DPHHS Office of Inspector General staff and Department of Revenue officials provided informational testimony on community-benefit reporting and property-value assessment practices. Department of Revenue staff said the fiscal-note estimate for exempt real-property value used in the bill was about $29 million, while the sponsor had earlier cited a larger historical figure from the 2020 audit; witnesses said differences stem from methodology and the audit's use of historical data.
Committee members questioned whether defining community benefit in statute or leaving it to rule making under House Bill 45 would create duplicate or conflicting requirements; sponsor and witnesses said the amendment avoids conflicting standards by incorporating definitions and relying on the department's earlier rule-making authority. The hearing closed after proponents, opponents and the sponsor described areas for continued negotiation on definitions and how property taxes and community benefit should be compared and certified.
