During times of crisis, hospitals are frequently called upon to provide lifesaving services. From natural disasters to pandemics, hospitals met the challenges and their staffs, sometimes to their own personal detriment, were there to support their patients and communities.
Sadly, hospitals and healthcare workers are also easy political targets. Quickly forgotten are the crucial roles they played in their communities as both the provider of those lifesaving services and as major employers paying exceptional wages.
So, early in the second Trump Administration term, we are already hearing about efforts to challenge many hospitals’ not-for-profit status (easy targets). So, let us talk about that, “Why is it important to know why some hospitals are not-for-profit corporations?
Hospitals retain their not-for-profit status due to the critical role they play in delivering community-focused healthcare services and fulfilling charitable missions (think of the hospitals districts and our other hospitals with religious affiliations). So, here are some key reasons why our not-for-profit hospitals should maintain their status current status.
Not-for-profit hospitals are required to provide a cadre of Community Benefits. First, they must provide Charity Care. That care must be to uninsured or underinsured individuals regardless of their ability to pay. Second, they must also provide Community Health Programs. They invest in programs to address public health issues, such as disease prevention, health education, and screenings. In addition, they must provide Research and Education. Many not-for-profit hospitals support medical research and training for healthcare professionals, benefiting the broader healthcare system.
While earnings for for-profit hospitals are shared with owners and investors, not-for-profit hospitals reinvest surplus revenue into improving facilities, purchasing advanced technology, expanding services, and hiring staff. This reinvestment directly enhances patient care and community health and has a multiplier effect as those revenues are reinvested in the community to the benefit of local businesses.
Not-for-profit hospitals also attack the problems associated Underserved Populations. I am most recently aware of Broward Health’s new maternity care center that they built in Lauderdale Lakes where they are focusing on reducing premature births. In fact, with many not-for-profit hospitals, it is not uncommon to find then operating in underserved or economically disadvantaged areas where healthcare access is limited. Maintaining their status helps them focus on serving vulnerable populations without the pressure felt by others to generate shareholder profits.
Maintaining their Section 501(c)(3) of the Internal Revenue status, qualifying hospitals must also provide quantifiable community benefits. I have had the pleasure of participating in this process for several of our member organizations and it is truly amazing the numbers and types of programs that have been created to address the healthcare needs of the medically disadvantaged.
We can also talk about not-for-profit hospitals providing programs that have previously been provided by the public health system thus reducing the financial burden on governmentally supported system. We saw that during the pandemic.
Not-for-Profit hospitals are going to have a challenging four years. Complaints about some not-for-profits not providing enough community benefits and, or perhaps providing what is felt to be excessive executive compensation has caused “tongues to wag”. These are not things that Boards and oversight can’t correct. We need to meet the challenges..
Revoking tax exemptions have the potential of shifting more costs to patients and taxpayers, with the potential of reducing access to care for those most in need.
Retaining the not-for-profit status allows hospitals to focus on their mission of improving community health, prioritizing care over profits, and addressing societal health inequities.
We will keep our eyes on this situation.
