Tower Health fights to get tax-exempt status with appeal

West Reading, Pa.-based Tower Health has appealed a county judge's decision to deny tax exemptions for three of its Pennsylvania hospitals, according to the Reading Eagle.

Tower Health sought property tax exemptions for Brandywine Hospital in Coatesville, Jennersville Hospital in West Grove and Phoenixville Hospital. The three hospitals are based in Chester County, just west of Philadelphia, and were acquired in 2017 from for-profit Franklin, Tenn.-based Community Health Systems. 

A Chester County judge denied the bid Oct. 14, citing several reasons the three hospitals shouldn't qualify for a property tax exemption, including that they don't provide enough uncompensated services, they work with many physicians at for-profit facilities, and they don't operate free of profit motives because of executive compensation structures.

The Chester County decision came a week after a Montgomery County, Pa., judge voted to approve Tower's application for a property tax exemption for Pottstown Hospital. 

The Chester County case has the attention of nonprofit hospitals, school districts and local municipalities, according to the report. Attorneys William Kennedy and Jared Johnson of law firm White and Williams said the judge's decision could have long-term financial consequences for nonprofit hospitals in the state. The ruling has also made local districts start considering tendering property tax notices to nonprofit healthcare entities that have been exempt in the past. 

"A recent trial court decision could have significant, long-term consequences for the financial models of Pennsylvania nonprofit healthcare providers," the attorneys wrote. "Ruling that three nonprofit Chester County hospitals of the Reading, PA-based non-profit Tower Health system are not tax exempt 'charities,' a judge has ordered them to begin paying millions in annual local property taxes which fund local school districts."

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