One of Grassley’s ongoing investigations is related to the tax exempt status of nonprofit hospitals. The latest hospital to come under his scrutiny is none other than the University of Chicago Medical Center that until recently employed Michelle Obama, the wife of the Democratic Nominee for President.
Grassley first asked nonprofit hospitals for information about their tax exempt status in 2005. This was followed by a request for the IRSto provide greater scrutiny of nonprofit hospitals in June 2006. He wanted the IRS to look more closely at the definition of charity care and community benefit, the amount of charity being provided by the hospital, and the salary of executives. He also asked the Government Accountability Office (GAO) in 2007 to conduct a formal study of how nonprofit hospitals are meeting the community benefit requirement to remain tax exempt. Grassley said about this request that “[w]e need to get a better handle on how nonprofit hospitals are fulfilling their requirement to serve the community in exchange for the generous tax breaks they receive.” The senator has also raised concerns over the transfer of medical debt to financing companies and operations of small doctor owned hospitals.
So how does this relate to Michelle Obama? Senator Grassley recently became concerned that the University of Chicago Medical Center (UCMC) was not meeting the community benefit standard after reading stories about the hospital’s policy to send patients with non-critical medical needs to local clinics instead of providing them treatment. Grassley is concerned that the “medical center appears to be ‘culling the least profitable patients from its emergency room.’ ” This lead Grassley to send a letter to the Medical Center requesting information about the hospitals incorporation, facilities, tax exempt bond issuance, political activities, consumer information, endowments and donations, budgeting procedures, detailed financial information, and compensation and job descriptions for two vice presidents including Michelle Obama’s former position. Read the text of the letter here.
Grassley is being attacked by Obama supporters as being a surrogate of the McCain campaign and playing dirty politics. This is an unfair attack. The investigation into nonprofit hospitals has been ongoing for years and has not been isolated to Michelle Obama’s hospital. In addition to the University of Chicago Medical Center, Grassley has also requested information from the University of Texas M.D. Anderson Cancer Center following reports about the hospital’s demand for upfront payment from some patients. Whether you support the investigation or not, Mr. Grassley can not be accused of targeting UCMC because of the presidential campaign of Obama.
The real question is whether this investigation is prudent and necessary. Grassley Watch has been critical of the senator’s investigations in the past and this is no exception. While it is understandable that the federal government wants to ensure that there is a public benefit to the tax exempt status of these hospitals, should it not be the IRS conducting this investigation? In the case of both Anderson Cancer Center and UCMC, it appears that Grassley is attempting to dictate hospital operations and impact their ability to conduct fiscally responsible business.
In response to the letter sent by Grassley to UCMC, the hospital CEO said that their Urban Health Initiative is “just a wiser use of resources … We want to make sure the right treatment, at the right time in the right place is given for the best outcome.” Scott Gottlieb, in a recent Wall Street Journal op-ed, agreed with the CEO by saying “[the initiative] saved [the] hospital money, and it also surely improved the health of the people it served.”
Grassley’s intentions may be good in this case, but good intentions do not necessarily make good policy. Mr. Grassley, let the health experts determine how to best serve their patients.
Originally posted 09/10/2008 on Grassley Watch