There are prejudices around non-profit hospitals due to their location in low-income areas, low-quality care, and unprofitability. Hospitals are eligible for non-profit organization status, which exempts them from income tax, property tax, and sales tax in exchange for providing charitable care and other public services aimed at helping the community (Bai et al., 2020). They provide services that benefit the community through hospital revenue, such as drug addiction treatment programs and mental health care. The prejudice that non-profit hospitals are in low-income areas may be justified. First, people in low-income areas often cannot afford expensive health care. Thus, non-profit hospitals do not receive funds from the community and therefore do not make a profit. Secondly, there is a prejudice about the low quality of medical services in non-profit hospitals, which usually corresponds to people’s perceptions of low-income areas.
Non-profit hospitals are often more profitable than commercial hospitals, despite popular opinion. The main reason is that non-profit hospitals are defined as charitable institutions. If the hospital does not have to pay taxes, its costs will be significantly lower than those of similar commercial organizations. In addition, the charitable institution benefits from tax-free donations as well as government assistance to organize projects. Non-profit hospitals, focusing on both profit and performance, achieve high results by expanding their range of services through high-priced premium specialty medical services. Non-profit hospitals have a wider range of services, thus attracting government support and advertising. Moreover, a study by Bai et al. shows that non-profit hospitals spend less on charitable care for the uninsured than for-profit and public hospitals (2021). This becomes possible because the government does not specify any requirements for charitable assistance. Thus, government assistance to non-profit hospitals can have a negative effect and increase their hospitality, but to the detriment of the community.
References
Bai, G., Yehia, F., & Anderson, G. F. (2020). Charity care provision by US Nonprofit Hospitals. JAMA internal medicine, 180(4), 606-607.
Bai, G., Zare, H., Eisenberg, M. D., Polsky, D., & Anderson, G. F. (2021). Analysis Suggests Government And Nonprofit Hospitals’ Charity Care Is Not Aligned With Their Favorable Tax Treatment: Study examines government and nonprofit hospital charity care expenses compared to charity care obligations arising from the organizations’ favorable tax treatment. Health Affairs, 40(4), 629-636.