HOSPITAL EXPANSION QUESTIONS MOUNT
WHAT FINANCIAL SUPPORT WILL A VIRTUA EXPANSION OFFER TO OFFSET LOST TAX REVENUE?
This article explores financial questions regarding Virtua’s expansion in Mt. Holly. We strongly suggest that residents attend Virtua’s public meeting on Wednesday, June 4th at 6pm at their ground floor conference room.
If you have not read our previous work on this subject, we suggest you check our article “Virtua Pulls The Trigger” where we assess the taxes formerly paid by a property that Virtua recently bought and ask the question: “How will Virtua offset taxes for all the land it occupies almost tax free?”
https://www.themounthollyreporter.org/p/virtua-pulls-the-trigger
PROPOSED EXPANSION DETAILS
The Reporter reviewed the June 10, 2024 Council meeting in which a representative of Virtua stated that a new 4-story tower will be built at the location of Bank Avenue behind the hospital. This tower will create “64 private patient rooms” [ie, single bed] and create ten new operating rooms.
“there is no proposed increase in the overall bed count of the hospital”. Virtua Representative
STATE LAW ON NON-PROFIT HOSPITALS
Mount Holly taxpayers should be aware of tax law that applies to the expansion of Virtua Hospital on Madison Avenue. 501[c]3 non-profit hospitals like Virtua are largely exempt from property taxes. But in 2021, New Jersey enacted law that secures a yearly contribution from nonprofit hospitals to their host municipality to help defray the costs of the municipal services they utilize. The new law makes these hospitals subject to a “community service contribution” based on the number of “licensed beds” they have.
Unfortunately for Mount Holly taxpayers, the contribution law does not count the number of formerly taxable land parcels lost to non-profits. As we pointed out in our previous article [see above], that tax revenue is gone. The new law only counts the number of beds put into service at a hospital.
IF THE BED COUNT DOESN’T INCREASE, THE CONTRIBUTION DOESN’T INCREASE.
There is a national trend in hospitals. The number of double occupancy rooms is going down. For instance, health care industry consultant Advisory Board reported that “Johns Hopkins Hospital renovated its buildings so 96% of patients, or every non-psychiatric patient, can stay in a single room.”
Hospitals correctly point to the number of positive health outcomes arising from single occupancy rooms. That obvious common good is celebrated by everyone.
But what hospitals don’t mention are “community service contributions” and the plight of municipalities that keep losing tax revenue to non-profits.
A NON-PROFIT FLEXES ITS BANK ACCOUNT
Evidence regarding the ability of Virtua to pay additional community service contributions is available in its expansion announcements, which recently described a 200,000 square foot, $500 million addition to the Our Lady of Lourdes hospital in Camden. The Philadelphia Inquirer reported that “In a sign of its current financial strength, Virtua plans to pay for the new construction without borrowing money”.
Residents should keep this in mind on June 4th when asking questions about how Mount Holly can reach a financial accommodation for its lost ratables.
TIMEFRAMES
The Philadelphia Business Journal just reported that Virtua announced the following with regard to its expansions in Mt. Holly:
“Another $350 million is being spent at Virtua Mount Holly under a multiyear renovation project that includes 10 new operating rooms, new labs and medical suites, an expanded emergency department, and refurbished hospital units. The health system expects to begin construction at the Burlington County hospital next year, and the work is expected to take two years to complete.”
ADDITIONAL READING
The Mount Holly Reporter encourages its readers to check out the League of Municipalities’ opinion about non-profit hospitals which can be found here