Nonprofit Hospitals, Once for the Poor, Strike it Rich

Did anyone read the article Nonprofit Hospitals, Once for the Poor, Strike it Rich on the front page of The Wall Street Journal’s April 4 edition? 

The article details how nonprofit hospitals are outperforming their for-profit rivals by utilizing tax breaks and being frugal with their required community care, also known as the “free treatment for poor patients that nonprofit hospitals are expected to provide in return for the deferal and state tax breaks they receive.”

Of the 3,400 hospitals in the United States, 2,033 are nonprofit hospitals.  77 percent of those nonprofit hospitals are operating in the black, while only 61 percent of for profit hospitals are profitable, according to data from the American Hospital Directory (AHD).

As to be expected, nonprofit hospitals are facing some scrutiny, and new IRS standards are set for 2009 which will require nonprofit hospitals to break out specifics of their community-benefit contributions.

Nonprofit hospitals are claiming a number of reasons why they are flourishing where their for-profit counterparts are not, namely:

Gradual increases in Medicare reimbursements since the 1990s
Demanding upfront payments from patients
Hiking list prices for procedures and services
Selling patients’ debts to collection companies
Focusing on expensive procedures
Issuing tax-exempt bonds and investing the proceeds in higher-yielding securities

Read the entire article by clicking here: Nonprofit Hospitals, Once for the Poor, Strike it Rich