Respond to 5 classmates

Post 1. What is the fuss all about? Benefits vs. drawbacks Tax-exempt status of hospitals means that the hospital “ is not responsible for paying federal and state income taxes, state and local sales taxes on purchased goods and services, nor local real estate and personal property taxes on land, buildings, and major equipment” (Nowicki, 2011). The purpose of this is to relieve the responsibility of the government to provide medical services for those who seek out the service but cannot pay for it – a benefit for the government (Nowicki, 2011). Other benefits include providing goods and services to the local community, through goals and values. Providing services to the local communities encourages health-promotion, which results in achieving the goal of encouraging primary-care (Nowicki, 2011). “ Nonprofit hospitals are more likely to offer unprofitable services and to locate in areas with a higher proportion of low-income and uninsured residents” (Byrne, 2014). A drawback observed by Byrne (2014) is that hospitalists appear to earn lower wages then their for-profit counterparts, in a sense donating some of their time to the community. The hospital loses it’s ability to divide the profits amongst it’s employees beyond what’s considered “ reasonable” salaries. Not-for-profit hospitals are essentially designated to “ engage in exclusively charitable purposes” (Nowicki, 2011).
Healthcare has evolved into one of the most important issues in the contemporary times. The tax-exempt status of not-for profit health organizations become important as they are able to reach wider segment of people who require quality healthcare at accessible prices. Indeed, the tax exemption helps them to buy quality healthcare goods at lower prices which helps the organizations to maintain the high standard of effective healthcare delivery to the poor and the needy, especially the uninsured population. At the same time, Rosenthal (2013) asserts that the tax-exempt status is abused by many non-profit health organizations. This is major drawback that needs to be constantly monitored by the authorities so that the intended purpose of providing tax exemption can be justified for treating the needy and making quality and efficient healthcare delivery accessible to the target population who cannot afford increasing cost of healthcare.
Post 2.
1. What is the fuss all about? Benefits vs. drawbacks
A major benefit for a hospital having tax exempt status is being able to issue tax-exempt bonds; the yields are 4-5% below taxable bond yields. Tax exempt hospitals work under the pretense that they are doing something the government would have to be doing- in essence, this is the government’s reward.
It has been argued that for-profit hospitals funded the “ technology boom” (Nowicki, 2011). For profit hospitals do not deny access to care (Nowicki, 2011)- which has been an arguable drawback for not-for-profit hospitals. For profit hospitals charge more per patient per day, however the not-for-profits have been accused of overcharging the uninsured. In 2006, it was found that not-for-profit provided higher levels of uncompensated care and for-profits operated in lower income areas (Nowicki, 2011).
This is wrong assumption that tax-exemption of hospital issue tax-exempt bonds whose yields are nearly 5% below taxable bonds which is seen as benefit! The real benefit is in terms of making healthcare accessible to the poor and uninsured which the non-profit hospitals do. Also it is not true that only for-profit hospitals exploit technology. The benefits and drawbacks should be looked upon from the perspective of hospitals and customers/ patients. Non-for profit organizations are doing commendable services by making healthcare affordable and accessible to the population that cannot afford quality healthcare. The only major drawback seems to be the low wages of the employees who are serving the poor.
Post 3.
2. If you work for a not for profit, what can your organization do to protect its status? If not, what can organizations do, in general, to protect their status?
There are several things organizations can do to protect their Not for Profit status. To start, under the IRS 501(c) (3) program, a community health needs assessment must be completed and implemented every 3 years and readily available to the public (Nowicki 2011). “. A CHNA must identify significant health needs of the community, prioritize those health needs, and identify potential measures and resources available to address them” (Speizman, Mitchell, 2013). The not for profit facility must also devise financial assistance policies Financial assistance policies need to be developed for determining the amount charged to patients on financial assistance, a determination of how much debt can be collected from them, and pre-determined availability of emergency care regardless of the patients ability to qualify for the assistance (Nowicki, 2011). The facility must ensure they are staying within the charitable realm by ensuring they are operating exclusively for charitable, scientific or educational reasons (Nowicki, 2011). Lastly, the main goal for not for profit facilities is to serve the public, not the organizations private interests – i. e. providing extra monies toward wages to Presidents and CEO’s of the corporation rather than allocating the funds to supplement hospital deficiencies.
Byrne, P. F. (2014). Do Workers Profit from the Nonprofit Tax Exemption? The Impact of State Tax Exemption on the Nonprofit Wage Differential of Hospital Workers. Public Finance Review, 42(2), 199-221.
Nowicki, M. (2011). Intro. To The Financial Management of Healthcare Org. 5th Edition. Chicago: Health Administration Press.
Speizman, R., & Mitchell, A. (2013). keeping step with IRS guidance on requirements for tax-exempt hospitals. Hfm (Healthcare Financial Management), 67(9), 114-122.
The author has really addressed the core issues of the community healthcare which promote transparency and regular assessment of community healthcare needs as well as evolving financial assistance policies for determining the basic minimum charged that can be levied on the poor and the needy. Indeed, it is important that charity health institutions which enjoy tax exemption must be focused on their goal of servicing the poor and not exploiting the benefits of tax exemption for their vested interests. Moreover, stringent rules and regulations must be enforced for tax-exempt hospitals so that they really provide quality and appropriate healthcare services to the poor and not merely perform lip services. Nowicki believes that it is important that emergency care be provided regardless of whether patient qualifies for the service or not, is hugely critical issue of effective healthcare delivery (2011). The charitable hospitals must ensure that equity is maintained while providing healthcare services.
Post 4.
2. If you work for a not for profit, what can your organization do to protect its status? If not, what can organizations do, in general, to protect their status?
To protect the status of a not-for-profit, the company needs to operate exclusively for charity, science or education, serve public interests, and do not engage in political campaigns (or anything that can be perceived as showing favor towards one side). To protect the status, hospitals need to be transparent with financial statements. If a hospital is truly not-for-profit, clear financial records should be available for viewing to the public without fail.
Nowicki, M. (2011). Introduction to the Financial Management of Healthcare Organizations . Chicago: Health Administration Press .
Indeed, in order to protect the status of tax-exemption, not for profit organizations must work in the areas of public interests with focused attention the needs and requirements of the community. Transparency is important criteria of good governance and therefore transparency in financial statements would indicate the honest intentions of the tax-exempt organizations. Their high standard is also reflected in their non-political leanings and equity based actions that broadly cater to the needs of the poor. The government should also have stringent rules that must be followed by tax-exempt healthcare organizations so that they cannot exploit their status or the benefits of not paying taxes which are intended for serving the poor. The basic purpose of not for profit healthcare institutions is to promote healthcare equity and make a healthy world. By providing free or low-cost quality healthcare delivery, tax-exempt play vital role in society that justifies their special status.
Works Cited
Nowicki, M. Introduction to the Financial Management of Healthcare Organizations 5th ed. Chicago, IL: Health Administration Press, 2011.
Rosenthal, E. (2013). Benefits Questioned in Tax Breaks for Nonprofit Hospitals. NYT, 22 Dec. 2013. Web. 26 May, 2014.