PubMed · 16032964
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Colleen Shannon. 2005-06-30. Action speaks.. https://pubmed.ncbi.nlm.nih.gov/16032964/
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Skeptics question nonprofit health care on the grounds that nonprofits fail to distinguish themselves from their for-profit counterparts and do not reliably provide community benefits commensurate with their tax subsidies. Drawing on the most recent and comprehensive evidence, we assess these charges, judging them to be either wrong or incomplete. Although conventional critiques are therefore unconvincing, there are nonetheless important challenges facing the nonprofit sector in American medicine. To address these, we propose reformulating ownership-related policies to define both the appropriate forms of community benefit and the appropriate mix of ownership in terms of local markets and communities.
Defenders of tax preferences for nonprofit hospitals and health plans, including Mark Schlesinger and Brad Gray, contend that nonprofits deserve government support because they provide greater "community benefit" than their for-profit counterparts. This argument is unconvincing. There is some evidence that nonprofits deliver marginally more "community benefit" but no evidence that tax exemption is the cause. Absent proof that tax expenditures, including exemption, "buy" social benefits that are worth the cost to taxpayers, these expenditures are unjustified. The better course would be to pay nonprofits for performance, by tying tax benefits to accomplishments (beyond current achievements) in health promotion, quality, and care for the needy.
Mark Schlesinger and Brad Gray have summarized research comparing nonprofit and for-profit health care in a remarkably useful form. Their paper effectively demonstrates how nonprofit and for-profit health care differ. However, their proposal for community control over nonprofit health care organizations in exchange for tax exemption, like many current proposals requiring nonprofit hospitals to provide free care for indigent patients, risks undermining the purpose of the nonprofit organizations and the care they provide. These trade-offs are significant yet have not been acknowledged in policy debate.