Arkansas hospital seeks to increase Medicare reimbursement with move to nonprofit status

To boost Medicare reimbursement, Magnolia (Ark.) Regional Medical Center seeks to form a nonprofit corporation to handle hospital operations, spokesperson Karen Weido confirmed to Becker's Hospital Review.

The hospital is currently owned by the City of Magnolia and operates as government entity for tax status purposes. It receives a quarter of a cent sales tax for maintenance and operations as well as a 1 1/8 cent sales tax to pay for bonds that were issued to fund the construction of the existing hospital building, which is 10 years old.

But the medical center board and CEO have proposed to the city council the formation of a nonprofit corporation, with a separate name from the hospital so that the hospital can operate under tax-exempt status, said Ms. Weido.

She said tax-exempt status would allow for better fee-for-service payments from Medicare and qualify the hospital for other benefits afforded to nonprofits. The city would lease the hospital building to the nonprofit corporation once it was formed.  

The hospital still plans to operate under the Magnolia Regional Medical Center name.

Ms. Weido said the hospital's legal team is preparing paperwork to submit to the IRS for nonprofit status, and if that's approved, will begin the process of transitioning operations to the new nonprofit corporation.

"The plan is that employees and the community will never notice a difference. Hospital operations will continue as usual," she added.


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