Summary: Nonprofit or for-profit? In the hospital world, as in the journalism world, there are a number of preconceptions about these two words, and the business practices that underlie them. So when the Minnesota Star-Tribune ran a commentary recently about that topic in connection with health companies, I was really interested. Read on for details, or ….
“For a hospital to be recognized as a charitable organization, it must satisfy something called the community benefits standard,” Steve Calvin and Theodore J. Patton wrote.
“Until 1969, the IRS required hospitals to provide charity care — that is, without expectation of payment — in order to meet this standard and qualify for nonprofit status.
“Unfortunately, today the current community benefits standard has no such requirement. The current standard is vague and overly broad. It takes into account as community benefits worthy but unrelated activities ranging from round-the-clock emergency rooms to providing bikes for children.
“So, how profitable are ‘nonprofit’ hospitals in the United States? McKinsey and Co. recently found that the 2,900 nonprofit hospitals in the U.S. had higher profit margins than their 1,000 for-profit counterparts.
“Nonprofit health care executives appropriately argue that without a financial margin there is no mission. But it appears that too often the margin has become the mission.” Steve Calvin and Theodore J. Patton, “Minnesota’s nonprofit health care: Can you heal me now?,” Star-Tribune, Jan. 2, 2015.