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80 FINANCE Louisiana Hospital Gives Up Charitable Status to Avoid Tax Penalties By Ayla Ellison W innsboro, La.-based Franklin Medical Center's board of com- missioners agreed in early March to terminate the hospital's 501(c)(3) charita- ble status, according to e Franklin Sun. Internal Revenue Code Sec. 501(r) was creat- ed with the passage of the Affordable Care Act and sets forth requirements nonprofit hospitals must meet to maintain federal tax-exemption under IRC Sec. 501(c)(3). With the board's move, the hospital will no longer have to meet charitable organization requirements such as conducting a com- munity needs assessment every three years. It will also avoid penalties associated with failing to meet those requirements. Franklin Medical Center Administrator Blake Kramer said ending the hospital's 501(c)(3) status will have little impact on the hospital's operations. e hospital is already tax exempt because it is considered a govern- ment entity under the Franklin Parish Policy Jury, according to the report. "We may miss out on some grants, but the only big change is not having to worry about the IRS coming and saying 'you owe us a bunch of taxes,'" said Mr. Kramer. Franklin Medical Center CFO Billy Page said "accounts receivable is big," which indicates the hospital is struggling with collections. Without 501(c)(3) status, the hospital will be able to more aggressively pursue collections because it will no longer have to wait 120 days to pursue claims for nonpayment as is required to maintain charitable status under the Internal Revenue Code. n Retail Clinics May Cause Healthcare Spending to Rise By Ayla Ellison R etail clinics, often viewed as a mechanism to decrease healthcare spending, may actually cause spending to rise by driving new health- care utilization, according to a recent study published in Health Affairs. To assess whether retail clinic visits represent new utilization or a substitute for more expensive care, such as emergency department visits, researchers used Aetna insurance claims data for the period of 2010 through 2012 to track utilization and spending for 11 low-acuity conditions. The study revealed 58 percent of retail clinic visits for low-acuity conditions represented new utilization, resulting in an increase in spending of $14 per person per year. Researchers said the increased utilization and spending associated with retail clinics is consistent with innova- tions in other industries and other areas of healthcare. For example, the introduction of laparoscopic technol- ogy greatly increased the number of cholecystectomies performed, and the introduction of personal computers caused the number of computers sold to rise. "In each of these cases, the relative advantage of the innova- tion increased the number of potential users, thereby increasing utilization and, subsequently, spending," said the study's authors. The study's authors acknowledged limitations to the study, as it did not offer conclusions about whether increased use of retail clinics prevented hospital stays or reduced the need for prescriptions. n BECKER'S CIO/HIT + REVENUE CYCLE CONFERENCE mark it down july 27-28, 2016 • fairmont, chicago Call 1.800.417.2035 or email registration@beckershealthcare.com