The truth about Idaho hospital taxes

Saint Alphonsus will seek a property tax exemption when it completes its new hospital in Nampa.
Saint Alphonsus will seek a property tax exemption when it completes its new hospital in Nampa.

About $793 million of hospital property in Ada County is tax-free. That’s because the properties — more than 100 locations — belong to the nonprofit Saint Alphonsus and St. Luke’s health systems.

While the main campuses of Saint Alphonsus and St. Luke’s in Boise and Meridian may leap out of the horizon, they, and the various clinics they’re associated with, make up less than 22 percent of the value of all tax-exempt property in the county.

But the acreage is soon to grow. Both nonprofit health systems are building new medical centers in Nampa and plan to seek tax exemption as soon as those hospitals open.

Q: But they’re private organizations. Why do they get a tax break in the first place?

A: Idaho law gives certain hospitals a big break on property taxes. In return for state and local tax exemptions and federal tax exemptions, the hospitals must follow a set of rules.

They must take patients regardless of their ability to pay. They must be overseen by a board of community members. They cannot distribute their profits to shareholders. And they must research and attempt to solve the community’s most pressing health needs.

For example, Saint Alphonsus has a mobile mammogram bus that screens for breast cancer even in uninsured women, and St. Luke’s is offering free healthy-cooking classes this month.

Q: When a health system buys a doctor’s practice, is it taken off the tax rolls?

A: Sometimes. But many doctors do not own their buildings when they sell their businesses to St. Luke’s or Saint Alphonsus. So the hospitals often just take over the doctors’ leases, which mean the property’s taxes do not change.

The two health systems paid more than $2.5 million combined in property taxes on leased or rented buildings in fiscal year 2015, according to their representatives.

Q: Do the hospitals have to meet quotas to get a tax exemption?

A: No. There is nothing in the law that says Idaho’s nonprofit hospitals must, say, give 25 percent of their care to the poor. In their latest tax forms, the health systems reported spending between 3.75 percent (Saint Alphonsus in Nampa) and 7.5 percent (St. Luke’s valley-wide) of their total expenses for the most recent year on both medical services to the poor and “community benefit” programs.

There also are no rules on how much the hospitals can charge for services or pay their executives and employees.

Audrey Dutton: 208-377-6448, @IDS_Audrey

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