Hospitals Go To The Mattresses To Avoid Transparency

Unsplash/piron-guillaume

Washington just got an important lesson in the uncharitable nature of what were once called charity hospitals. When House Ways and Means Chairman Jason Smith floated a proposal to require nonprofit hospitals to explain how they are using their tax-exempt status to benefit patient care, the hospital lobby moved quickly to issue thinly veiled threats to lawmakers on the committee.

The markup was pulled under duress, and the American Hospital Association (AHA)revealed its clients would go the mattresses to squash efforts at transparency that threaten the status quo. (RELATED: Banning ‘Anti-Competitive’ Hospital Contracts May Lower Healthcare Costs Across US, New Report Says)

That reaction should raise a simple question: what, exactly, are nonprofit hospitals trying to hide?

Tax-exempt hospitals receive more than $50 billion annually in federal, state, and local tax benefits. The rationale is straightforward. In exchange for those subsidies, hospitals are supposed to provide meaningful community benefits, especially charity care for low-income patients. It is a classic example of a well-intentioned policy designed to support the vulnerable.

In practice, however, the incentives have drifted. Many large hospital systems now operate less like charities and more like sophisticated financial enterprises while still enjoying the privileges of nonprofit status.

Start with consolidation. Over the past decade, tax-exempt hospitals have expanded into sprawling regional systems, acquiring physician........

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