The IRS might specify how much community benefit is required. It is usually a tiny fraction of revenues. Hospitals self-report what counts. And “community benefit” can include not just charity care for uninsured patients, but also medical education, research, and here is my personal favorite, “unreimbursed Medicaid costs,” which is to say: the hospital counts the difference between what it billed Medicaid and what Medicaid paid as a charitable contribution to humanity. The hospital incurs a loss on a transaction and records it as a charitable contribution. The accounting profession should give this maneuver an award. Remember that healthcare is the only business where charges bear no relationship to costs, and reimbursement bears no relationship to charges.
Studies have found that a significant number of non-profit hospitals provide less in charity care than they receive in tax benefits. In other words, the public gives them more than they give back. But rest assured, the gala centerpieces were exquisite.
I believe in excellent healthcare. I believe in research and innovation, and in the remarkable work that skilled doctors and nurses do every day in hospitals across this country. The people on the front lines of patient care deserve every bit of our admiration and support.
What I do not believe in is the theater. The artful deployment of the phrase “non-profit” to conjure images of selfless sacrifice when the reality is a sophisticated, tax-advantaged, executive-enriching enterprise that happens to also treat the sick.
The next time someone in a nice suit tells you their hospital is a non-profit and extends a hand for your donation, I invite you to ask a simple question: “How much does your CEO make?”
Then watch their face as it grimaces.
You can leave before they finish the answer. Life is far too short.