Is it time for the non-profit hospital to go?


Looked at objectively, the non-profit hospital is something of an oddity. After all, such hospitals are forced to act as aggressively as investor-owned hospitals--in other words, to operate efficiently, build market share and stay "profitable." Given this reality, just how effective is the tax-exempt hospital system, anyway? Is it really an effective way to channel scarce financial resources to poor patients?

I'd argue that it's time to have an honest dialogue about non-profit, tax-exempt hospitals, and whether their exemption still makes sense. I know this notion may offend some readers, but honestly, can we afford to have untouchable sacred cows when our system is in crisis?

At minimum, it's worth asking whether non-profits should be forced to meet tougher standards if they want to justify their exemption. The idea that the current tax-exempt system isn't working is certainly accepted on Capitol Hill, where they're discussing a wide variety of enforcement measures.

Of course, the American Hospital Association is frantic over this, but they have to be. For more of us, however, it really makes sense to challenge the notion that giving non-profits a no-strings attached pot of money--which tax exemptions effectively do--is a great idea.

Before you get ready to fire me off an angry email, please understand that I realize that the non-profit system has had some notable successes, too. It's not as though no tax-exempt hospital is doing enough to justify their exemption; in fact, many are doing wonderful work.

Still, the reality is that this hybrid model (run like a charity, act like a ruthless competitor) is a bit awkward, at best. While it may not be a good idea to make radical changes, there's certainly room to make the model more rational. After all, why complain that the system doesn't work if you won't even consider big changes? - Anne

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