Notice of IRS Clarification on Health Care Joint Ventures

We want to alert you to a recent clarification of the IRS position on how to properly structure joint ventures between tax-exempt hospitals and related entities and physicians or for-profit entities. The  important question is: whether an exempt organization must receive credit when it contributes an ongoing business enterprise (e.g., its existing ambulatory surgery center) to a joint venture with  physicians or proprietary interests. The question had been raised as a result of a recent private letter ruling addressing a hospital-physician joint venture in which it was not clearly stated that the  hospital had valued its existing ASC or outpatient surgery volume and received appropriate credit for contributing it to the venture.