Thursday, October 1, 2009

How "not-for-profit" Hospitals are suppose to operate

Not-for-profit hospitals (NFPs), have operated free from federal and state taxes because they have promised the government that they would operate as a charity provider of health care for the uninsured and that they would not engage in business "directly or indirectly, for the benefit of private interests." In reality, some NFPs do just the opposite:
  • Charging their uninsured patients significantly more than those who have Insurance, Medicare or Medicaid;
  • Pursuing the poor or uninsured relentlessly by aggressive and humiliating collection techniques;
  • Rampantly violating federal and state prohibition against profiteering by "private interests, " through either "connected" board members and/or physicians whose for-profit businesses are formed and subsidized by the "tax-free" organization.

Certain NFPs, and their subsidiaries who employ the same business model, have amassed and hoarded billions of dollars in cash and marketable securities that otherwise would have been available to provide charity care to those who were contemplated by the tax exemption. Moreover, enormous property and revenues have been isolated from taxation, the effect of which has bestowed upon the NFPs greater liquidity than that possessed by most state and local governments.

Lawsuits have been filed against NFPs asking the Court simply to require the Defendants to honor their obligation to provide charity care to those who need it, and to cease the cronyism to favored board members or physicians whose businesses are being unlawfully subsidized by the perverse business practices summarized above.

Source: Not-For-Profit Hospitals Class Action Litigation Press Release

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