HFMA members address hearings - Healthcare Financial Management Association's Christopher Weinheimer and Leila McGehe testifies before the Financial Accounting Standards Board

Healthcare Financial Management, Oct, 1991

Two members of HFMA's Board of Directors testified at major legislative and regulatory hearings in July.

On July 10, HFMA Treasurer Christopher Weinheimer, FHFMA, CPA, presented the Association's views on the issue of hospital tax-exempt status before the full House Ways and Means Committee (see September "Updata"). On July 17, Director Leila McGehe testified before the Financial Accounting Standards Board (FASB) hearing on accounting for contributions.

TAX-EXEMPT STATUS. The tax-exempt status hearing focused on bills introduced by Rep. Brian Donnelly (D-Mass.) and Rep. Edward Roybal (D-Calif.) that would require hospitals to provide specified levels of charity care to remain tax-exempt. Weinheimer, who is senior vice president at the Medical Center Hospital of Vermont in Burlington, Vt., was a member of a panel that included representatives from the American Hospital Association, the Catholic Health Association of the United States, the Association of American Medical Colleges, and the American Protestant Health Association.

All the panel participants shared HFMA's position that tax-exempt status should be based on the array of community benefits that hospitals provide. "Charity care is one of those benefits--a major one--but it should not be the sole criterion," Weinheimer said.

The current community benefit standard for determining tax-exempt status, he said, "allows hospitals to respond to the special health-care needs of all, not just the medically indigent," For this reason, HFMA opposes the Donnelly and Roybal proposals, each of which would make charity care the principal test for determining tax-exempt status.

Weinheimer's testimony drew heavily on guidance from HFMA's Principles and Practices Board and from an HFMA's Chairman's Task Force on Tax-Exempt Status.

HFMA Chairman-Elect Bonnie L. Phipps, FHFMA, CPA, who also attended the hearing, expressed concern that the legislators at the hearing did not have a good grasp of the different services hospitals offer to their communities.

"[Hospitals] do so many other things, and I think those would go away if we had to meet the proposed charity care standards," said Phipps, who is chief financial officer for DeKalb Medical Center in Decatur, Ga.

FASB TESTIMONY. HFMA was one of three healthcare orgnaizations that participated in FASB's three-day hearing on accounting for contributions. Leila McGehe, who is director of business development for New Britain (Conn.) General Hospital, appeared before the accounting board along with other HFMA staff members, representatives from Shriners Hospital, and representatives from the Association for Healthcare Philanthropy, which joined in HFMA's letter of comment.

HFMA's testimony focused on issues that could potentially increase record keeping and reporting complexity and impede contributions to healthcare organizations. Issues included clarity of financial reporting, pledges payable in future years, and criteria for recording contributed services. Many of these key points were emphasized in HFMA's letter of comment to FASB on the issue (see June "Updata").

"Over the past 20 years the nature of contributed and volunteered services to healthcare providers has changed dramatically," McGehe said in her testimony. "Volunteers are used in a variety of activities . . . Accounting for such a give and take of benefits to individuals and the community is extremely difficult and of questionable value in terms of financial statement enhancement. The key problem is the requirement to consider the attributes of the donor rather than the needs and control of the donee."