Fitch Ratings reports that not-for-profit hospitals are enjoying their highest margins since 1998. Operating margins improved 33.3 percent to 2.8 percent in 2005 from 2.1 percent in 2004.
This is both good and bad news for the not-for-profit sector, which could face backlash from the IRS if it appears as though the hospitals aren't providing enough charity care to maintain their tax-exempt status. The issue is clearly front-of-mind for the IRS: Last month the tax agency launched an investigation into whether 550 hospitals deserved to keep their tax-exempt status.
- see Fitch Rating's press release [1] about the profit margins
- check out this The New York Times report [2] on the IRS investigation
Links:
[1] http://www.fitchratings.com/corporate/events/press_releases_detail.cfm?pr_id=269113
[2] http://www.nytimes.com/2006/06/19/washington/19tax.html?ex=1152936000&en=79f3c4a6dcb86462&ei=5070