Sept. 1, 2011 | Lawmakers in Sacramento will begin investigating the public worthiness of non-profit health care providers who benefit from their tax-exempt status.

The audit requested by Senate Majority Leader Ellen Corbett was approved Aug. 24 by the Joint Legislative Audit Committee and will focus on assessing whether tax breaks given to health institutions correlate to the public benefit. The committee will also examine how non-profits calculate uncompensated care to the uninsured and the impact of consolidation on facilities and their ability to serve communities.

The last is likely the impetus for Corbett’s request as she and others in San Leandro continue to push against Sacramento-based Sutter Health’s intention to close their community hospital.

“Communities across California are served by nonprofit hospitals, and we need to make sure they are honoring their commitment to serve the public that comes with their special tax-exempt status,” said Corbett. “We must ensure that our communities and their patients are getting the care, and the access to care, they deserve.”

Last year, Corbett offered a bill in the senate limiting the ability of health care providers like Sutter from transferring the assets of hospitals within health care districts. The legislation was a direct reference to Sutter, which has also fought similar pressure from local communities in San Francisco, Santa Rosa and Marin over its intent to consolidate hospitals. Critics contend the tactic is a bait-and-switch where Sutter offers to build new facilities in locations hoping to attract higher-end patients in return for closing operations in areas with concentrations of poor and uninsured patients.

Alameda County Supervisor Wilma Chan, who represents San Leandro, has long urged Corbett to use the committee as leverage against Sutter and their lawsuit against the Eden Township Healthcare District. Chan told The Citizen last June, ” “If you do that, I found, agencies will pay attention,” said Chan, who chaired the committee during her time in Sacramento. In a press release last week, Chan said, “Taxpayers should know what benefits they’re receiving when hospitals receive approximately $250 million in tax breaks.”

Corbett’s office notes a study of 500 hospitals by the Internal Revenue Service found the public benefit of tax exemptions given to non-profits by municipalities to be relatively small.