Nonprofits turning for-profit spark controversy

Local nonprofit hospitals are making the controversial move to join forces with for-profit institutions, such as those in Massachusetts under the recent Steward Health Care System buying spree.

With Moody's recent report, the nonprofit outlook is bleak. Downgrades for not-for-profit hospitals outstripped upgrades by a four-to-one margin during the second quarter of 2011. And under the additional pressure of lowered reimbursements, nonprofit hospitals are especially struggling for funds and might be considering the financial support of larger for-profit institutions. For example, in New Jersey, Meadowlands Hospital Medical Center in Secaucus, Hoboken University Medical Center, and Christ Hospital in Jersey City are making the switch, reports the Hudson Reporter.

The move to for-profit doesn't come without controversy, though. For instance, Prime Healthcare in California recently made a bid for the cash-strapped Christ Hospital in New Jersey. California Watch, the target of Prime Healthcare's legal action, reported that the operator has purposefully admitted patients as part of a business strategy, alleging Medicare fraud. Some worry that under the oversight of the for-profit, Christ Hospital (along with other nonprofits) might fall to the same fate at the expense of patient care.

"When a hospital becomes a for-profit, what is the pay-off?" said Rutgers School of Business professor Mahmud Hassan in the article. "There will be an inflow of cash by the investors and improvements made at the hospital...But what does this mean for the community and the society once the hospital's status changes? The for-profit hospital is going to eliminate some services that are unprofitable. They will restrict indigent care." He continued, "Only time will tell if this is ultimately good or bad for the society."

For more information:
- read the Hudson Reporter article

Related Articles
Prime Healthcare creates nonprofit hospital division
IRS to block hospitals from filing group tax return
Nonprofit hospital execs earn more than $1M
Healthcare fundraising fared better in 2010

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.