The controversial question of what qualifies a hospital for tax-exempt status is being tackled by the Utah State Tax Commission, which hopes to have an answer by the end of the year.
Tax Commissioner Roger Tew met earlier this week with hospital industry officials to get their suggestions on what standards should be used in judging whether a hospital should be exempted from paying property taxes.The Monday meeting is the first of several expected to be held before regulations are drafted. Those will be the subject of a public hearing to be held later this year.
Tew said he does not expect the regulations ultimately adopted by the Tax Commission to settle the decade-old disagreement over what a hospital must do to stay off county tax rolls.
Whatever regulations the Tax Commission comes up with by its self-imposed year-end deadline, Tew said the matter is likely headed back to the courts - where it all started.
The long-standing tradition of automatically granting non-profit hospitals a tax exemption by classifying them as charitable organizations ended in 1985 with a ruling by the Utah Supreme Court.
The ruling established criteria that must be met by non-profit hospitals to ensure that they are not really for-profit hospitals in disguise, including showing that service is provided without the expectation of immediate payment.
But the way county governments have interpreted the criteria set by the courts has led to some 30 appeals on 1986 and 1987 tax assessments now pending before the Tax Commission.
That leaves the Tax Commission to referee between county governments and hospitals, which have been squabbling over the issue of tax-exempt status since the early 1980s.
The appeals, including those of Salt Lake hospitals ordered a year ago to pay taxes for the past two years, will not be heard until the Tax Commission regulations become effective.
There is also debate within the hospital industry, between for-profit and non-profit hospitals. The Utah Hospital Association, which represents both, has understandably not taken a position on what the regulations should say.
Tew is also sensitive to the rift within the industry and declines to speculate on how hospital consumers will be affected by whatever regulations are drafted.
Hospitals ordered at the county level to start paying property taxes have contended that losing their tax-exempt status will mean higher health-care costs and could affect the quality of care available.