Metro Regional Hospital (MRH) is a 501(c)(3) and state tax-e…
Metro Regional Hospital (MRH) is a 501(c)(3) and state tax-exempt charitable hospital. It operates two 200-bed hospitals in the Metro City urban area and three 50-bed hospitals in rural areas more than 100 miles from Metro City. All five hospitals serve a mix of insured and uninsured patients, some of whom are quite wealthy and others who are quite impoverished. Out of a gross revenue of $2 billion, 75% comes from insurance reimbursement, including from state and federal health programs; 10% comes from direct billing of uninsured and underinsured patients; 10% comes from state and federal grants for providing care to underserved communities in the hospitals’ coverage areas; and 5% from charitable donations. Over time, MRH has developed a charitable and reduced cost care application program, but given decreasing revenues and increasing costs the Board of Trustees is concerned that the more generous acceptance of applications that it has traditionally encouraged might become financially problematic. It orders its financial assistance office to direct applicants who might qualify for free or reduced cost care to the state Medicaid website to apply for Medicaid before permitting them to submit an application, and to encourage more higher income patients to apply even though their applications will likely be denied since they will not qualify financially (and MRH can still claim to have a high number of applications submitted). The Board of Trustees also directs the financial assistance office to identify patients who have medical debt with MRH and whose application for free or reduced cost care has been denied. The Board is considering selling the debt of those patients to a local collection agency and reporting non-payers to credit agencies. Do any of the actions or proposed actions of the Board of Trustees violate the requirements of MRH’s federal and state tax exemptions? Why or why not? What advice would your give to the Board to ensure it maintains its tax exemption, and what requirements of federal and state law would you base this advice upon? (3-4 sentences)