The Internal Revenue Service has established requirements for Hospitals interested in becoming considered for 501(r) non-profit tax-exempt status. I agree that non-profit hospitals should be exempt from paying taxes if the hospital understands and follows all guidelines to fulfill the requirements asked of them. An issue that some non-profit institutions face is lacking the ability to produce enough charitable care in relation to their total revenue. I also believe that the non-profit organizations mission is to be able to give back to the community by implementing programs for improvement. It would be wrong to say that the only way a hospital would qualify for such exemption would be through a deficit. If this were the case, heavy burden would be laid upon the hospital to seek other alternatives of funding to help its people or shut down. Due to the lack of trust in non-profit hospitals, continued and increased charitable care within the community must continue. Illingworth and Parmet (2006), notes “Nonprofit hospitals must, of course, be concerned with generating sufficient revenue to maintain themselves, but they are not concerned with earning a return on their investment for the benefit of stockholders. Their purposes are altruistic. Any surplus must be used in a manner that aggrandizes no one, such as for the lowering of rates, the acquisition of new equipment” (pg. 317). Because other hospitals have abused the tax-exempt status, it has caused true non-fraudulent hospitals to be scrutinized and forced to comply under more rigorous guidelines. Nonetheless, those hospitals should have a clear idea on their position as non-profit to avoid any indication of wrongdoings.
Illingworth, P. & Parmet, W. (2006). Ethical health care. Upper Saddle River, NJ: Pearson Prentice Hall.
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