High Stakes

A Hospital Loses its Property-Tax Exemption: A Cautionary Tale

The recent loss of property-tax exemption for Morristown Medical Center in New Jersey is a less-than-subtle signal that hospital executives should take a look at how they are telling their story of community benefit.

Regularly sharing your hospital’s community contributions with key stakeholders is not just a nice thing to do. It’s a proactive step that can head off what we’ve seen as isolated, but recurring campaigns across the country over the last several years to question the tax-exempt status of not-for-profit hospitals (and their property).

In the ruling, the judge cited executive salaries, golf-club memberships and other forms of compensation, as well as a more general reference to today’s hospitals operating like for-profit entities. These are arguments that no hospital or health system is exempt from. And the nearly decade-long battle occurred despite the $100 million in charity care the hospital documents each year.

It’s easy to see the motivation by the city of Morristown in the case. It will get $2.3 million more a year in property taxes for each of the three years covered in the ruling, a significant boost to city coffers. But it’s not good for hospitals or the cost of care. This is a move that should frighten hospitals in New Jersey and across the country – we can be sure it will continue to be a much-watched case if it goes through the appeal process.

So, how do you tell your story effectively so that the full extent of what your organization is giving back and your investments in the community’s health are well-understood and valued – so that your community benefit is never called into question (especially by key stakeholders)?

Here are a couple of ideas:

  • First, you need to recognize that building relationships with key stakeholders – sharing your value and role as a vital community partner – is a slow burn. The key is to build these relationships before you need them. Play offense. If you’re not already, meet with your elected officials and their staff regularly. Share with them all the ways your organization gives back to the community and the role you play as an essential partner for the community.
  • Invite them to experience some of your community programs. Bring them to your new mobile mammography unit. Let them experience a screening/treatment program you conduct in conjunction with a local organization serving the underserved. Put their hand on a shovel of a groundbreaking that will bring new services to their community.
  • Instead of an annual Community Benefit Report in a glossy brochure – which stakeholders may or may not review when they receive it in the mail – develop a microsite that shares all the information in an accessible way. It can include the same facts and statistics, but also house video with real people – patients, clinicians – bringing the stories to life. And it can be updated throughout the year as you have new information to share.
  • Do a road show. Travel through the community and present to civic groups, business groups and community leaders, tweaking your message for the particular interests of each audience.

You need to be aggressive in telling your story, engaging with your target audiences in positive and proactive ways. When you think you’ve shared it enough, share it again.

 

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