Tax-exempt hospitals and "community benefit"

Excellent discusion by John Colombo over at Nonprofit Law Prof Blog, ostensibly about the recent GAO report, Nonprofit Hospitals: Variation in Standards and Guidance Limits Comparison of How Hospitals Meet Community Benefit Requirements (GAO 08-880), but also about current thinking as to whether nonprofit hospitals should be tax-exempt in the first place. His conclusion:

Though I've mellowed on that subject since writing my first article about tax exemption for nonprofit hospitals 20 years ago, when I read stories like this one in the Wall Street Journal (subscription required), detailing how Ascension Health is closing inner-city facilities that lose money in favor of massive investment in suburban hospitals that generate profits (complete with widescreen TV's in private rooms!), I begin to think that any hospital that (1) does not qualify as an educational organization (e.g., a university-affiliated teaching hospital) or (2) does not PRIMARILY serve the poor (an inner-city hospital or perhaps some rural hospitals that are the only source of health care services in their geographic area) ought to be denied exempt status. Let Ascension Health, which reported aggregate net operating revenues of over $500 million last year, pay taxes like any other big business. Which is what it really is.