VIRTUA EXPANSION: NO FINANCIAL METRICS
HOSPITAL IGNORES QUESTIONS ABOUT ADEQUATE HOST COMMUNITY COMPENSATION
SUMMARY: This is Part 1 of our report about the Virtua hospital expansion, dealing strictly with what the hospital pays to Mount Holly. Virtua is classified as a “charitable” entity that is not subject to property tax on its hospital buildings/land. Instead it pays a “community service contribution” [referred to by many as a “bed tax”] which is calculated per “licensed bed”. The new building will contain 64 single occupancy rooms and critically for Mount Holly revenue, the old section of the hospital will be renovated to transition from double occupancy to single occupancy rooms. So while the number of rooms will increase significantly, the number of “licensed beds” will increase only slightly, therefore the bed tax will not rise appreciably. How much does Mount Holly lose in property taxes versus what it gains in bed taxes? The Reporter asked many follow-up questions to get at this issue, but Virtua chose not to respond.
TAX COURT FINDS SOME NON-PROFIT HOSPITALS ARE A “LEGAL FICTION”
We start this story in 2015, when Morristown NJ sued a local non-profit hospital claiming that its tax exempt status should be revoked because it was essentially operating as a for profit business. In that case, the NJ Tax Court ruled that other “nonprofit hospitals” which operated in the same manner as the Morristown hospital were engaging in “a legal fiction” since they had a high amount of for-profit activity. In 2016, The Burlington County Times reported that Mount Holly was suing Virtua:
“The township [of Mount Holly] has challenged the tax-exempt status of Virtua Memorial, the latest of close to three dozen challenges filed by municipalities across New Jersey against nonprofit hospitals.”
Neither the attorney who lodged the suit for the township nor former public officials would respond on the record to The Reporter regarding the outcome of that suit.
THE STATE CREATES A “BED TAX”
As a direct result of the 2015 tax court ruling, New Jersey passed a law which “keeps the property tax-exemption of nonprofit hospitals while securing a yearly contribution to the host municipality” [Greenbaum, Rowe, Smith & Davis LLP].
MOUNT HOLLY GETS ABOUT $419,385 ANNUALLY VIA THE “BED TAX”
Based on this law, the 2021 “licensed beds” count of 339 and the $3.00 per bed daily “community services contribution”, Virtua should have paid Mount Holly $371,205 in 2021. The law also requires a 2% annual increase, so by 2024, Virtua would have paid $393,477. During May of 2025, the Philadelphia Inquirer reported that the hospital had 383 beds, which would push the 2025 Bed Tax to $419,385.
During the June 4, 2025 meeting held by Virtua, resident Mike Rothmel asked if a Payment in Lieu of Taxes [PILOT] was agreed to or under discussion. Virtua VP Julie Herb stated that neither was the case. Former Mayor Rich Dow asked "What is the hospital giving back" and Herb responded: "a bed tax". This response was quickly followed up by Todd Koretsky, VP of Finance who said Virtua gives back by providing a mobile food and mobile pharmacy program [for a two county area, see below].
Note: Virtua ignored follow-up email questions from the Reporter regarding the actual payments made to Mount Holly and the value to Mount Holly of the mobile food and pharmacy programs.
DOES MOUNT HOLLY LOSE REVENUE IN THE PROPERTY TAX VERSUS BED TAX ARRANGEMENT?
When the Mount Holly Reporter posed a similar question to Virtua, Vice President Julie Herb responded
“If the town requires a financial impact statement, we would provide it.”
So without meaningful response from Virtua, The Reporter had to calculate its own approximate amount of property tax dollars lost to Virtua’s non-profit status.
We used publicly available data to calculate the tax dollars PER ACRE generated by residential property adjacent to the hospital. As you can see below, 10 acres or housing adjacent to Virtua were selected. The annual property tax generated by these parcels [in 2022] was $231,740 or $23,175 per acre. Using this value, if the 25 acres owned by Virtua were instead taxed as residential property, the township could expect about $579,350 in property tax in 2022 dollars. That’s $614,111 in 2025 dollars if you apply a 2% annual inflationary increase that often is included in tax bills.
That’s an estimated $184,726 annual loss to Mount Holly.
BUT THE HOSPITAL OFFERS MORE THAN JUST A BED TAX, CORRECT?
Yes it gives us a medical center within minutes of our homes. That save lives. But Eastampton, Westampton and other nearby communities get that same benefit without losing property taxes.
Virtua also gives Mount Holly contributions to fund various community events such as the 4th of July fireworks for which it contributes $5,000. It provides some kind of sponsorship for the Fire and Ice. The combined amount of sponsorship is likely less than $10,000, or about 2% of the bed tax.
Finally, Virtua provides charitable services to the community, including towns in Camden and Burlington County. At the June 4, 2025 meeting, a Virtua rep stated that their Mobile Food Access programs and the Food Pharmacy program are examples of how Virtua gives back to the community. It should be noted that the Mobile Food program is a traveling store, not a free service, and that it offers produce and shelf stable items at “below-market prices”. The closest stop of the store is in Willingboro. The Reporter could find no on line reference to the Mobile Pharmacy, but there is a Mobile Pediatric van which has its closest stop in Willingboro https://www.virtua.org/About/Community-Programs/Pediatric-Mobile-Services .
While these programs are helpful to communities throughout Camden and Burlington counties, their value to Mount Holly as a host community is severely diluted.
Note: The Reporter asked the total value in dollars of these programs and their value to Mount Holly. Virtua did not respond.
Note: With regard to a diminished tax base, Mount Holly hosts not only Virtua but a number of social service providers and other large tax exempt properties, such as the county buildings.
AS A NON-PROFIT, CAN VIRTUA AFFORD ADDITIONAL CONTRIBUTIONS TO MT. HOLLY?
During May 2025, the Philadelphia Inquirer reported that Virtual Health Inc had 3.25 billion in revenue and a $195 million dollar operating income during 2024. The Inquirer also reported that as a sign of its financial health, Virtua would self fund the $350 million it will spend on the Mount Holly expansion project.
Based on this information, it would seem that Virtua could afford to do more for us as a host community.
As noted above, since Virtua would not supply any requested financial metrics, our conclusion may be subject to revision if new information is finally supplied by Virtua.
WHAT DID MOUNT HOLLY DO TO NEGOTIATE ADDITIONAL CONTRIBUTIONS?
A number of former Council members stated that a payment agreement with Virtua was negotiated by council in years past. Joe Jones stated that the details of the agreement were no longer something he recalled and that it occurred prior to the 2016 lawsuit.
The Reporter asked Township Manager Josh Brown a series of questions and as of the date of publication, he has not responded.
a. Has Mount Holly asked Virtua to conduct a financial impact statement for the township with regard to how much taxes are lost for the land owned by Virtua?
b. Did anyone on Council or in township administration suggest that a PILOT agreement should be negotiated with Virtua before the township considered/approved the recent Health and Science zone?
c. If so, was that attempted and what was the outcome?
d. If not, why would we not attempt to do that before giving the hospital a new zone?
WHY DOES IT MATTER?
What matters to residents is how much they pay to Mount Holly in taxes and what services are provided. Here are a list of some services that $184,726 in lost revenue could help to acquire:
a. A recreation building, perhaps on the Cedar Avenue land that Virtua does not plan to use.
b. More staff for code enforcement
c. More road repairs
d. No-interest loans to maintain historic properties
e. Upgrade to boat launch at Mill Dam
Property tax deficits due to the inordinate number of tax exempt buildings is a major factor affecting what services can be provided. As a hosting community, we could demand more from the heavy hitters who could step up and make a difference.