Is the non-profit hospital model defunct?


Looked at one way, the non-profit hospital is an odd business model. Despite pressure to provide charitable care and services, it must operate as efficiently as any taxable business if it hopes to survive. Of course, the tax exemption it receives is supposed to offset that burden significantly, but as non-profit hospital CEOs know, a tax credit can't be stretched indefinitely.

Sure, the idea behind not-for-profit hospitals--that they're chartered to serve the community first and foremost--is a noble one that has contributed much to many people's lives. The thing is, it's proving increasingly difficult (sometimes, almost impossible) to keep the focus on this mission when money is so tight.

So, I think the question must be asked: Is the tax-exempt model of hospital care an effective one for our times? In particular, is the notion that tax-exempt hospitals can efficiently meet the huge unmet health needs of the poor and uninsured a pipe dream? I'd argue that yes, perhaps it is. 

This argument is in no way intended to denigrate the professionalism or dedication of non-profit hospital leaders and staff members. What I'm suggesting, rather, is that there's probably a better way to subsidize the charitable work they've undertaken, one that doesn't rely on strict charity care formulas (a la Chuck Grassley) or turn a blind eye to the fact that there's more need out there than there are charity care resources.

That being said, what alternatives do we have? Do you have any thoughts on this? I'd love to get your opinion--write to me and share any thoughts or suggestions you might have. - Anne

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