When Pottstown Hospital in Pottstown, Pennsylvania, switched from a for-profit hospital to nonprofit status, the Pottstown School District lost a large source of funding for its schools, writes Andy Miller and Markian Hawryluk for KFF Health News.

Because the hospital no longer had to pay local property taxes, the already underfunded school district lost the more than $900,000 a year it used to receive from the hospital.

This led to cutting expenses, including teacher aide positions and middle school foreign language classes.

“We have less curriculum, less coaches, less transportation,” said Superintendent Stephen Rodriguez.

The school system has since appealed Pottstown Hospital’s new nonprofit status, and a state court reversed a trial court’s decision to give the facility a property tax break.

One of the reasons cited for this reversal was the “eye-popping” compensation for Tower Health executives.

Tower Health is trying to appeal the decision, but the court’s decision has unsettled many nonprofit hospitals. There are about 3,000 nongovernment tax-exempt hospitals in the U.S.

“The ruling sent a warning shot to all nonprofit hospitals, highlighting that their state and local tax exemptions, can be challenged by state and local courts,” said Ge Bai, a health policy expert at Johns Hopkins University.

Read more about this issue at CNN.

_____________

More on Pottstown Hospital.