Why Are Nonprofit Hospitals So Highly Profitable? These institutions receive tax exemptions for community benefits that often don’t really exist.

New York Times ^ | February 20, 2020 | Danielle Ofri

[karpov]

...

Patients are understandably confused. They see hospitals consolidating and creating vast medical empires with sophisticated marketing campaigns and sleek digs that resemble luxury hotels. And then there was the headline-grabbing nugget from a Health Affairs study that seven of the 10 most profitable hospitals in America are nonprofit hospitals.

Hospitals fall into three financial categories. Two are easy to understand: There are fully private hospitals that mostly function like any other business, responsible to shareholders and investors. And there are public hospitals, which are owned by state or local governments and have obligations to care for underserved populations. And then there are “private nonprofit” hospitals, which include more than half of our hospitals.

Nearly all of the nation’s most prestigious hospitals are nonprofits. These are the medical meccas that come to mind when we think of the best of American medicine — Mayo Clinic, Cleveland Clinic, Johns Hopkins, Mass General.

The nonprofit label comes from the fact that they are exempt from federal and local taxes (usually including property tax, payroll tax and sales tax) in exchange for providing a certain amount of “community benefit.”

Nonprofit hospitals have their origins in the charity hospitals of the early 1900s, but over the last century they’ve gradually shifted from that model. Now their explosive growth has many questioning — with good reason — how we define “nonprofit” and what sort of responsibility these hospitals have to the communities that provide this financial dispensation.

It’s time to rethink the concept of nonprofit hospitals. Tax exemption is a gift provided by the community and should be treated as such. Hospitals’ community benefit should be defined more explicitly in terms of tangible medical benefits for local residents.

It actually isn’t much of a surprise that nonprofit hospitals are often more profitable than for-profit hospitals.

[cloudmountain]

“Non-profit” is a tax status. They are allowed to make a profit - they just don’t have to pay taxes on that profit.

Lol.
NOW you are stating facts. How dare you? Trying to confuse us with truth, eh?

[Chickensoup]

“Non-profit” is a tax status. They are allowed to make a profit - they just don’t have to pay taxes on that profit.

_______________

You are so correct.

Non-profit is essentially an accounting issue.

The biggest moneymakers in our areas is healthcare and specificaly the hospital systems.

Big bucks