Do Nonprofit Hospitals Deserve Their Tax-Exempt Status?

[NRSKarenRN, BSN, RN]

Healthleaders Magazine

December 2004

Do Nonprofit Hospitals Deserve Their Tax-Exempt Status?

When for-profit hospitals first appeared in numbers on the healthcare landscape, more than a few nonprofit advocates worried out loud that a for-profit mentality would ruin healthcare.

..."Richard Scruggs, a Mississippi attorney who took on asbestos manufacturers and the tobacco industry, is perhaps the most infamous face associated with the public's increasingly negative view of nonprofit hospitals. "They're operating under a virtually identical business model," he says. Scruggs has filed 49 federal lawsuits in the past year targeting 370 hospitals that he says systematically overcharged the uninsured.

While troubling to nonprofits, Scruggs' lawsuits are little more than a nuisance compared to the scrutiny coming from other quarters. No less than three congressional committees are in the midst of investigations into the business practices of nonprofit organizations-starting with hospitals. On top of that, the IRS is investigating whether "excessive" salaries are being paid to executives at charities and other nonprofits, including hospitals. And, state and local authorities are turning their eyes toward hospitals with investigations that are forcing hospitals to justify their exemptions from property tax bills."...

Interesting read.

[actioncat]

There was an article about this in the NY Times Magazine this weekend. It appears that some non profits are scrambling to ensure that patients receive the charity care they are required to offer in order to maintain (incredibly valuable) non profit status. More than a few hospitals weren't (or were less than forthcoming about offering such care). There were some heartbreaking examples of hospitals going after clients that truly had no ability to pay.

They also spoke about the tiered fee structure--those with insurance get the lower negotiated fees. Those without insurance pay higher fees!

The article did not place all the blame on hospitals, however. There are many reasons that care is not accessible. To say the hospitals are the only ones at fault would be wrong.

[virmm1, LPN]

The healthcare corp I used to work for has a non profit hospital as well as for profit office practices. The head man gets a 6 figure salary. We were always told tht capital was tight and tht our practice was not making any profits while we were forced to do more with less. In the meantime the corp eats up every private doc office it can and continues to build on to the non profit hosp and build other new facilities too. In this case, I think the hosp needs to be taxed.

If the office practices weren't making profits then the building money had to come from somewhere.

[OC_An Khe]

There is no such thing as a non-profit institution. They all have to make a profit or they would cease to exist. All the non profit means is that the organization is tax exempt and can raise money through charitable donations. Beleive me they are all run on a for profit basis.

[lee1]

No and Yes,

I think an honest look at the salaries that are being generated for the top VPs should have caps imposed if they are NON profit.

Also it depends on what services they are providing to the community they serve.

How do they provide the basic bedside care--by stripping away the resources, educational materials, eductional TIME away from patients by increasing nurse/pt ratios, etc. etc.

More indepth journalism reports need to be generated on these issues so that the public can help make the decision of how their tax money is being spent and misspent.