Michigan Supreme Court Ruling on Hospitals Could Be Important Nationwide

The Michigan Supreme Court has ruled that a health-care facility can maintain its tax-exempt status even though it spends less than 1 percent of its budget on charity care.

The ruling was a surprise, says Dan Prives, a nonprofit-finance expert who writes the blog Where Most Needed, because lawmakers and regulators have increasingly been raising concerns about whether hospitals deserve tax-exempt status if they provide only a small amount of free care to the needy.

Mr. Prives says the decision “likely foreshadows” a similar outcome in an Illinois court case that deals with the amount of charity care provided by hospitals.

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