The Fairy Tale of a Non-Profit Hospital

By NIRAN AL-AGBA, MD Nonprofit hospitals have higher profit margins than most for-profit hospitals after accounting for their tax obligations.  3900 (62%) of U.S. Hospitals are non-profit and therefore tax-exempt: they pay no property tax, no federal or state income tax, and no sales tax.  An article published in Health Affairs found seven of the nation’s 10 most profitable hospitals were of the non-profit variety, each earning more than $163 million from patient care services. Revoking their property tax-exempt status for not functioning as a charitable entity could return billions in healthcare dollars to local government, communities, and citizens, struggling to afford quality health care. The idea of exempting nonprofits from paying taxes in the first place is based on the belief these entities provide charity for the underserved and underinsured who would otherwise require the government to lend a helping hand.  As the percentage of uninsured declines as a result of the ACA, the justification for tax exempt status is being called into question. Many nonprofit hospitals calculate their charitable care by using something known as “charge master” pricing; exorbitant, non-negotiated prices which are inflated many times higher than what private insurance or Medicare would pay.  This allows facilities to overstate their provision of “charity care,” calculated as revenue loss by the hospital in exchange for their lucrative tax exemptions. In a patient evaluated w...
Source: The Health Care Blog - Category: Consumer Health News Authors: Tags: Uncategorized Source Type: blogs