St. Louis-based Ascension Health is the latest nonprofit health system to field questions about its tax-exempt status, according to a St. Louis Post-Dispatch report.
"In its rapid fire evolution, Ascension has become a leading example of a nonprofit health system that often acts like a for-profit, blurring the line between businesses and charities," the report states.
Ascension has more than 1,500 locations in 23 states. Its parental sponsor, Ascension Health Ministries, is a corporation within the Roman Catholic Church that reports to the Vatican in Rome. In fiscal year 2013, Ascension's network of for-profit and nonprofit subsidiaries reported $17 billion in revenue. The organization paid no corporate income taxes on its nonprofit operations, and paid few property, capital gains and sales taxes, according to the report. Like other nonprofit health systems, it has access to tax-exempt bond financing.
A few events seems to have elevated the debate. Ascension Ventures, a for-profit subsidiary formed in 2001, has created venture capital funds on Wall Street to pool $550 million in investments in startup companies. Also, this month, Ascension opened the first phase of its $2 billion Health City Cayman Islands complex, a 2,000-bed facility in partnership with Indian hospital chain Narayana Health.
An executive from Ascension told the St. Louis Post-Dispatch that Ascension provides charity care to the poor, as well as $775 million in community benefits to the general public. Last year, it provided traditional charity care to the poor that cost $525 million, about 3 percent of its operating revenue. That rate is comparable to other local nonprofit health systems, according to the report.
But some experts don't see that defense as a guarantee for tax exemption. John Colombo, a law professor at the University of Illinois College of Law in Champaign, studies tax-exempt organizations. He raised some questions about Ascension's tax-exempt status in the report.
"Why is this organization charitable? In my view, it's not," he said. "They provide health services for the poor, but it's not their primary mission anymore. ... Ascension has transformed itself over time to a major big business enterprise. I'm not denying that they do some charitable things, but so does Microsoft — and they pay taxes."
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