News Headlines Article

New Jersey hospital’s loss of tax exemption sends warning
Modern Healthcare

Many not-for-profit[1] hospitals across the country could lose their tax exemption[2] if the same analysis of for-profit activities is applied to them as a New Jersey Tax Court judge recently used in revoking a Morristown hospital’s property-tax exemption, experts say.

Tax Court Judge Vito Bianco decided last month that because Morristown Medical Center operates in many ways like a for-profit business, it should not be exempt from property taxes. The hospital and its parent, Atlantic Health System, brought the lawsuit against the city of Morristown after the municipality had denied the hospital’s claims for property-tax exemptions for several years.

The ruling comes at a time when the tax-exempt status of not-for-profit hospitals faces increased scrutiny amid concerns that some are acting more like for-profit entities, especially when it comes to limited community benefit activities and aggressive debt collection. Though the judge’s ruling affected only the Morristown hospital, experts say it could have implications for hospitals elsewhere.