Wisconsin ~ Property Tax: Outpatient Clinic Qualified for Exemption

An outpatient clinic located five miles off-site from an affiliated hospital qualified for an exemption from Wisconsin property taxes because the clinic was used exclusively for the purposes of the hospital. One purpose of the construction of the outpatient clinic was to reduce the diversion of ambulances to a different hospital by rerouting less serious emergencies to the outpatient clinic urgent care center, and the record indicated that diversion was greatly reduced after construction of the clinic. The clinic also housed hyperbaric chamber care, and hospital patients were transported to the clinic to use this system. Additionally, medical and pharmaceutical records could be accessed at both facilities, the same persons generally led the departments at both facilities, both facilities were operated under the same license, and the same physician groups provided services at both locations.

Moreover, the clinic showed it was not a doctor’s office, which would not qualify for a tax exemption. Physicians practicing at the clinic did not receive variable compensation based on extent of services nor did they receive extra compensation for overseeing non-physician staff. Bills for the clinic were generated by the same software system as bills generated by the hospital. Finally, doctors did not have their own offices but instead shared unassigned cubicles, nor did the doctors own or lease the clinic building or equipment. The clinic also contained a gift shop and a cafeteria for use by patients, visitors, and staff, things typically not found at a doctor’s office. Finally, the proximity of the clinic to the hospital was deemed irrelevant when deciding whether the clinic was a doctor’s office.

Finally, the clinic was not used for commercial purposes. The hospital served a greater portion of Medicare and Medicaid patients than other hospitals in the area. Private shareholders and physicians did not receive any excess revenue that the clinic generated.

Covenant Healthcare System, Inc. v. City of Wauwatosa, Wisconsin Supreme Court, Nos. 2009AP1469 and 2009AP1470 , July 19, 2011, ¶401-453

Other References:

Explanations at ¶20-195

AUTHOR

Wolters Kluwer Tax and Accounting

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