Wayward Samaritans: 'Non-Profit' Hospitals and Their Tax Exempt Status

53 Pages Posted: 14 Apr 2023

See all articles by Daniel G. Bird

Daniel G. Bird

Kellogg, Hansen, Todd, Figel & Frederick PLLC

Eric Maier

Kellogg, Hansen, Todd, Figel & Frederick PLLC

Date Written: March 31, 2023

Abstract

Modern hospitals have strayed from their purely charitable roots. Many hospitals today function as part of large, corporate conglomerate healthcare systems, pay vast sums to executives, and consolidate power through vertical and horizontal mergers and acquisitions, just like commercial businesses do. Yet many hospitals continue to claim the “charitable” mantle and retain valuable tax exemptions. As a result, communities across the country are deprived of billions of dollars in tax revenues every year. This Article contends that tax exemptions for hospitals need a course correction. Hospital tax exemptions originally represented a social bargain – in exchange for vital medical services offered at no charge to the poor and destitute, communities relieved hospitals of their tax burdens. That social bargain has been distorted by the modern sea-change in hospital operation and organization. We trace the history of hospital tax exemptions and how the social bargain that once justified those exemptions fell into imbalance. Weak laws and weaker enforcement of tax-exempt status have blurred the line between tax-exempt and tax-paying hospitals. Federal and state governments need new standards with meaningful enforcement to restore balance to communities and the tax-exempt hospitals that serve them.

Keywords: Hospitals, health care, nonprofit, tax exempt, charity, consolidation, private equity, IRS, healthcare system

Suggested Citation

Bird, Daniel and Maier, Eric, Wayward Samaritans: 'Non-Profit' Hospitals and Their Tax Exempt Status (March 31, 2023). University of Pittsburgh Law Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4406495 or http://dx.doi.org/10.2139/ssrn.4406495

Daniel Bird (Contact Author)

Kellogg, Hansen, Todd, Figel & Frederick PLLC ( email )

United States
202-326-7971 (Phone)

HOME PAGE: http://https://www.kellogghansen.com/attorneys-Daniel-Bird.html

Eric Maier

Kellogg, Hansen, Todd, Figel & Frederick PLLC ( email )

1615 M St. NW
Ste. 400
Washington, DC 20036
United States
(202) 326-7923 (Phone)

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