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Non-Profit Health Care Issues

The health care industry consists of a variety of provider-type organizations, each with its own objectives and problems. Non-profit health care organizations provide services to people who can't afford the costs of care and to those unable to obtain adequate insurance coverage. The issues faced by non-profit organizations stem from their overall business objectives as well as their status as non-profit businesses.

  1. Recession Effects

    • The effects of the 2007 global recession slowed the flow of money within most all industry sectors as well as within the non-profit health care system. Non-profit organizations rely on government funding, partnerships with sponsors and donations from the public. According to Becker's Hospital Review, a health care industry news site, not-for-profit agencies saw an 11 percent decrease in charitable donations in 2009, which amounts to $944 million in lost revenue. Prior to the recession, annual contributions to non-profits saw a six year period of continued increases. Also affected was the return on investment from fundraising activities. A survey conducted by the Association for Healthcare Philanthropy in 2009 found a 23 percent decline in return on investment when comparing the amount of money raised by fundraising activities versus the amount of money invested.

    Tax Exemption Status

    • Non-profit health care organizations are expected to run their businesses for the sake of the people they serve rather than for profitable gains. As a result, these organizations receive a tax-exempt status, which significantly reduces the amount of taxes paid to the government when compared with for-profit organizations. According to the Premier Healthcare Alliance, a not-for-profit organization, consumer advocacy groups and various branches of government question certain practices within the non-profit health care sector in terms of how these organizations actually treat uninsured patients and those who can't afford to pay. Inquiries into the actual billing and collection practices used by non-profits examine differences in how much an insured patient is billed versus how much an uninsured patient is billed. Issues concerning the higher prices charged to uninsured patients have placed the tax-exempt status given to non-profits in question.

    Legal Issues

    • As of June 2010, as many as 60 class-action lawsuits were filed against non-profit hospitals within 21 different U. S. states, according to Premier Healthcare Alliance. Case filings have to do with incidents where hospitals have overcharged uninsured patients and used aggressive tactics to recover monies owed. In effect, the hospitals' non-profit status is being called into question. In 2006, the U. S. Internal Revenue Service carried out a survey of non-profit hospitals in an attempt to identify potential abuses in organizations that award CEOs with high salary incomes. In total, 1,800 non-profit hospitals were surveyed on compliance issues specific to tax-exempt organizations.

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