Washington Post Article Questions Status of Non-Profit Hospitals

Tags: non-profit hospitals | tax-exempt status

Non-profit hospitals like Adventist Health System in Orlando actually make substantial profits and get to keep them in return for providing a "community benefit," according to the Washington Post, in an article originally published in the Orlando Sentinel.

While Adventist Health System, which runs Florida Hospital, generated $363 million in profit in 2009, Florida Hospital alone reported spending $442 million, or 7 percent of its patient revenue, on charity care in 2008.

Not-for-profit hospitals were founded as charity hospitals to take care of the poor, but they've become "a big business," Frank Sloan, said a professor of healthcare economics at Duke University.

In exchange for not paying taxes, non-profit hospitals must provide charity care and "community-benefit programs," including everything from health fairs to glaucoma screening. But the amount of charity care they actually provide is an uncertain statistic.

Becky Cherney of the Florida Health Care Coalition said non-profit hospitals appear to be over-reporting their charity contributions. The bill for an appendectomy on an uninsured person, for example, may be listed at full price, even though managed care companies pay about half that amount, she said.

Having access to untaxed profits leads to a medical "arms race," in which one hospital tries to outdo the other with hotel-like rooms and the latest technology. Hospitals "probably overbuild, over-technologize, and quality often will go down," said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance.

Read the Washington Post report on non-profit hospitals.

Read more on non-profit hospitals:

- What Makes A Hospital "Charitable?": Billing and Collection Issues for Charitable Hospitals Post Health Reform

- Study: Non-profit Healthcare Organizations Averaged Investment Returns of 18.8% in 2009

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