Pennsylvania hospital loses tax-exempt status: 4 things to know

Springfield (Pa.) Hospital has held tax-exempt status since it was founded in 1960. However, it should have lost its tax-exempt status when it was acquired by a for-profit company in 2016, according to a recent decision by Pennsylvania's Commonwealth Court, the Delaware County Daily Times reports. 

Here are four things to know.

1. Springfield Hospital was part of Springfield-based Crozer-Keystone Health System when the system was sold to for-profit Prospect Medical Holdings in July 2016. After the deal closed, the local taxing district issued Prospect a $433,956.15 real estate tax bill dated July 1, 2016, according to the Delaware County Daily Times.

2. Prospect disputed the bill, but the Delaware County (Pa.) Common Pleas Court sided with the local taxing authority, ruling that the property could be taxed beginning July 1, 2016. Prospect appealed the decision, and the Commonwealth Court affirmed the lower court's ruling.

3. In the majority opinion, Commonwealth Court Senior Judge Dan Pellegrini wrote that under a 1994 agreement between Springfield Hospital, the Springfield School District and Springfield Township, a property must be owned and operated by an entity "exempt from federal taxation" in order to be tax-exempt.

4. Although Crozer-Keystone is pleased taxes on its hospitals help support local communities, the system disagrees with the court's ruling.

"We disagree with the court's 2-1 ruling that Springfield Hospital's tax status should change effective July 1, 2016," a Crozer-Keystone spokesperson told the Delaware County Daily Times. "Under existing law, the hospital should become taxable at the start of the taxing authorities' next fiscal year and not at the time of the acquisition. We are evaluating whether to appeal this decision."

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