Hospital profits from nonprofit tax loopholes

Tim Darragh and Ann Wlazelek, of The Morning Call, report on the Lehigh Valley (PA) Hospital which posted a record surplus - $ 76 million - in 2005. "Such boomtown prosperity at a nonprofit institution is allowed under the tax code as long as the hospital provides a substantial "community benefit" each year in exchange for an exemption from local, state and federal taxes." Scrutiny of this "community benefit" illuminates problems in state and national rules. "Much of what the hospital claimed as community benefit was what for-profit businesses would consider routine business costs: unpaid bills, employee orientation costs...another significant portion of its reported community benefit involved putting a price tag on the hospital's volunteers." Darragh and Wlazelek look the issues at hand, including suggested tax reforms at the federal and state levels.