Nonprofit Hospitals Need New Regulations

ACORN Local 100 Non-Profit

            Nairobi            Here’s the fiction:  nonprofit hospitals are dedicated to serving the healthcare needs of their community, regardless of income.  Because of this fiction, the IRS grants them a tax-exemption worth approximately $28 billion per year.  Here’s the fact:  they don’t act that way, especially the larger nonprofit hospital chains.  ACORN and our partners, Local 100 United Labor Unions and the Labor Neighbor Research & Training Center have done a number of reports, particularly focusing on the Arkansas, Louisiana, and Texas establishing how little actual charity they provide.

There’s more evidence of these facts all the time.  The latest might be the strategy of some of the larger nonprofit chains as they adapt to the Biden administration’s more muscular antitrust focus.  To counter their monopolistic practices in their legacy and adjacent territories where their acquisitions could be more easily challenged by the Justice Department, some are mastering the cross-market merger strategy.  All that really means is that some of them are jumping around the country buying up other dominate local and regional chains, believing that they can argue that they are not monopolies or acting in restraint of trade, because the nonprofits they are purchasing were supposedly not monopolies in their own markets.

As an op-ed in the Times details:

Now health care systems are reaching far and wide to find other hospitals to acquire. This is exemplified by the California-based Kaiser’s acquisition of Geisinger Health in Pennsylvania announced in April. Since then, hospitals in Missouri, Texas and New Mexico were involved in two other cross-market mergers. In another example, Advocate Aurora Health’s merger late last year with Atrium Health created a juggernaut with 67 hospitals strung across six states, from Wisconsin to North Carolina. We are witnessing the advent of the new American megahospital system.

One report after another and a cascade of newspaper and other investigations make it clear that nonprofit hospitals are making a mockery of any notion of charity, despite their ceaseless claims.  The Affordable Care Act delegated the Internal Revenue Service with policing this problem, but it is now abundantly clear as the years go by that the IRS was not able to rein nonprofit hospitals to abide by their self-declared missions before the ACA and are even more helpless now as megahospitals emerge.

Normally, this would mean that Congress would act and craft appropriate regulations to protect the public and its interest in accessible and competent healthcare and the healthcare industry, which supposedly would be committed to fair competition for services and patients.  Dr. Navathe in his column calls for nonprofit hospitals to be capped along the same lines as healthcare insurers, where administrative costs and profits can’t exceed 15 to 20%.  If that seems overly generous, it only speaks to the desperation so many of us have in trying to find any port in the storm to force the nonprofits to fulfill their missions, rather than continue to behave like for-profits, except in name only.

Calling for Congress to do anything in these times seems a voice in the wilderness.  States have some authority over tax exemptions as well, and that might be an avenue to leverage for change.  Where unionized, nurses and other hospital workers have taken action to try to balance the scales, but that’s limited as well.

These physicians are not going to heal themselves or stop doing harm, so government and the rest of us need to step up.