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Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expan

Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. This is why it seems each locale is packed with care all from one central hospital. They have to keep growing to maintain "non-profit" status.

tssva 3y ago
HCA operates 168 hospitals and is ranked #66 on the Fortune 500. Tenet operates 65 hospitals. These are the 2 largest for profit hospital operators in the US. There are others.
ceejayoz 3y ago
Non-profits don't have to avoid profit. The difference is what they do with any profits; they can't distribute it as dividends to owners/shareholders.
- s1artibartfast 3y ago
  I think the point is the same, and somewhat interesting. Do most hopspital non-profits channel their profit into growth or price discounts. In my opinion, it is fairly common for non-profits to adopt growth as a goal in of itself, and try to extract as much value as possible from customers to further it
  - ceejayoz 3y ago
    It's an important distinction. Non-profits are not obligated to hide/spend their profits. They're allowed to accumulate fabulous wealth if they want (see, for example, Harvard's $50B endowment). Non-profits, in theory, serve a societal/community purpose rather than existing to make a profit for their shareholders. You're not wrong that some of these lose sight of these purposes in favor of a bunch of MBAs telling them "growth! growth! growth!" (and the CEO salaries that come from such growth), but it's not because the IRS requires them to. The problem isn't tax law; it's the "everything must always grow or it's a failure" economy we've set up.
    - dragonwriter 3y ago
      > Non-profits, in theory, serve a societal/community purpose True of charities and certain other classes of non-profits, not true of other non-profits unless “societal/community purpose” is reduced to a meaningless phrase covering every possible purpose besides returning profits, including enabling a group of sppnsoring firms to earn bigger profits.
      - ceejayoz 3y ago
        The list of "Exempt Organization Types" on https://www.irs.gov/charities-and-nonprofits https://www.irs.gov/charities-and-nonprofits is pretty heavily societal/community style purposes. (Political organizations is the most debatable on there.) That there are all sorts of loopholes and tax fiddles possible doesn't change the underlying theoretical motivation.
        dragonwriter 3y ago
        Sounds like someone hasn't really clicked through the multiple levels to find out what is wrapped up under “other nonprofits” (which is most of the categories of non-profits), and so is only considering political orgs and the three different subsets of 501(c)3 charities listed at the top level on that page. Because otherwise I think that 501(c)6 Business Leagues would be a lot higher than Political Organizations on a list of things whose purpose is a lot less social/community than enabling private profit.
        ceejayoz 3y ago
        The rules for business leagues look entirely reasonable (https://www.irs.gov/charities-non-profits/other-non-profits/requirements-for-exemption-business-league https://www.irs.gov/charities-non-profits/other-non-profits/...). I don't doubt there are questionable ones, but claiming they can't have a valid societal/community benefit is tough.
- bombcar 3y ago
  Certain types non-profits cannot "show profit" even if it's just to build their rainy-day fund, or they're limited in how big that can be.
  - yieldcrv 3y ago
    which types would that be? operating foundations have a stricter regulation that could fit that, based on where their money comes from that year
    - bombcar 3y ago
      I believe https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6) https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6) are an example, but the "maximum on held-over funds" may be a state-level requirement.
dragonwriter 3y ago
> Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. That doesn't make any sense; it seems to be based on the premise that “non-profit” means the firm can't make surplus income, but it just means they are structured so as not to return profits to investors or some other party.
- tsunamifury 3y ago
  How does that not make sense. That’s what it is. Non profit has no charity requirements
  - bombcar 3y ago
    Most people think of non-profits as charities but there are various types, some more common than others, such as "mutual-benefit nonprofit corporation".
    - yieldcrv 3y ago
      the non profit world uses those terms ambiguously it took me a while to parse when I was learning and setting up my own I paid estate and non profit lawyers to give me relevant case law and journals to understand. Really powerful stuff to learn before you need it.
  - dragonwriter 3y ago
    > How does that not make sense. That’s what it is. No, its not. Nonprofits can retain unlimited surplus income. They are called nonprofit or not-for-profit because they don't return profits (either directly or through a claim on assets) to some set lf stakeholders. The upthread post invented a false rule based on a wrong (if popular) interpretation of a name, and then invented a conspiracy theory about people gaming that rule which doesn't exist in the first place.
deleted 3y ago
[deleted]
Aurornis 3y ago
> In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. Expanding operations reduces scarcity. More clinics reduces wait times and puts downward pressure on prices. Supply and demand. I don't even understand what you're arguing for. Do you want them to limit the number of clinics and take profits instead of expanding?
- smolder 3y ago
  > I don't even understand what you're arguing for. I don't really think they were arguing for anything, but there's a clue what they'd argue for right there in the bit you quoted "lowering costs for patients"
- s1artibartfast 3y ago
  There could be an argument that it is not expanding supply, or that competition is not putting downward pressure on price. A simple example of this could be to hospitals engaged in a marketing battle for a fixed pool of customers. A counter or example could be that over expansion in services leads to lower efficiency and higher prices. This could be the case when the service selector is a different party than the payer, so the pricing feedback is broken. A tragedy of the commons essentially.
W00kasz 3y ago
[dead]

tssva 3y ago

HCA operates 168 hospitals and is ranked #66 on the Fortune 500. Tenet operates 65 hospitals. These are the 2 largest for profit hospital operators in the US. There are others.

ceejayoz 3y ago

Non-profits don't have to avoid profit. The difference is what they do with any profits; they can't distribute it as dividends to owners/shareholders.

s1artibartfast 3y ago
I think the point is the same, and somewhat interesting. Do most hopspital non-profits channel their profit into growth or price discounts. In my opinion, it is fairly common for non-profits to adopt growth as a goal in of itself, and try to extract as much value as possible from customers to further it
- ceejayoz 3y ago
  It's an important distinction. Non-profits are not obligated to hide/spend their profits. They're allowed to accumulate fabulous wealth if they want (see, for example, Harvard's $50B endowment). Non-profits, in theory, serve a societal/community purpose rather than existing to make a profit for their shareholders. You're not wrong that some of these lose sight of these purposes in favor of a bunch of MBAs telling them "growth! growth! growth!" (and the CEO salaries that come from such growth), but it's not because the IRS requires them to. The problem isn't tax law; it's the "everything must always grow or it's a failure" economy we've set up.
  - dragonwriter 3y ago
    > Non-profits, in theory, serve a societal/community purpose True of charities and certain other classes of non-profits, not true of other non-profits unless “societal/community purpose” is reduced to a meaningless phrase covering every possible purpose besides returning profits, including enabling a group of sppnsoring firms to earn bigger profits.
    - ceejayoz 3y ago
      The list of "Exempt Organization Types" on https://www.irs.gov/charities-and-nonprofits https://www.irs.gov/charities-and-nonprofits is pretty heavily societal/community style purposes. (Political organizations is the most debatable on there.) That there are all sorts of loopholes and tax fiddles possible doesn't change the underlying theoretical motivation.
      - dragonwriter 3y ago
        Sounds like someone hasn't really clicked through the multiple levels to find out what is wrapped up under “other nonprofits” (which is most of the categories of non-profits), and so is only considering political orgs and the three different subsets of 501(c)3 charities listed at the top level on that page. Because otherwise I think that 501(c)6 Business Leagues would be a lot higher than Political Organizations on a list of things whose purpose is a lot less social/community than enabling private profit.
        ceejayoz 3y ago
        The rules for business leagues look entirely reasonable (https://www.irs.gov/charities-non-profits/other-non-profits/requirements-for-exemption-business-league https://www.irs.gov/charities-non-profits/other-non-profits/...). I don't doubt there are questionable ones, but claiming they can't have a valid societal/community benefit is tough.
bombcar 3y ago
Certain types non-profits cannot "show profit" even if it's just to build their rainy-day fund, or they're limited in how big that can be.
- yieldcrv 3y ago
  which types would that be? operating foundations have a stricter regulation that could fit that, based on where their money comes from that year
  - bombcar 3y ago
    I believe https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6) https://en.wikipedia.org/wiki/501(c)_organization#501(c)(6) are an example, but the "maximum on held-over funds" may be a state-level requirement.

dragonwriter 3y ago

> Hospitals are all non-profit so they can reap tax benefits. In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. That doesn't make any sense; it seems to be based on the premise that “non-profit” means the firm can't make surplus income, but it just means they are structured so as not to return profits to investors or some other party.

tsunamifury 3y ago
How does that not make sense. That’s what it is. Non profit has no charity requirements
- bombcar 3y ago
  Most people think of non-profits as charities but there are various types, some more common than others, such as "mutual-benefit nonprofit corporation".
  - yieldcrv 3y ago
    the non profit world uses those terms ambiguously it took me a while to parse when I was learning and setting up my own I paid estate and non profit lawyers to give me relevant case law and journals to understand. Really powerful stuff to learn before you need it.
- dragonwriter 3y ago
  > How does that not make sense. That’s what it is. No, its not. Nonprofits can retain unlimited surplus income. They are called nonprofit or not-for-profit because they don't return profits (either directly or through a claim on assets) to some set lf stakeholders. The upthread post invented a false rule based on a wrong (if popular) interpretation of a name, and then invented a conspiracy theory about people gaming that rule which doesn't exist in the first place.

deleted 3y ago

[deleted]

Aurornis 3y ago

> In order to avoid profit but still maintain growth, they shovel all their profits into network expansion. New hospitals, clinics, outpatient centers, wellness centers, all that in order to avoid lowering costs for patients. Expanding operations reduces scarcity. More clinics reduces wait times and puts downward pressure on prices. Supply and demand. I don't even understand what you're arguing for. Do you want them to limit the number of clinics and take profits instead of expanding?

smolder 3y ago
> I don't even understand what you're arguing for. I don't really think they were arguing for anything, but there's a clue what they'd argue for right there in the bit you quoted "lowering costs for patients"
s1artibartfast 3y ago
There could be an argument that it is not expanding supply, or that competition is not putting downward pressure on price. A simple example of this could be to hospitals engaged in a marketing battle for a fixed pool of customers. A counter or example could be that over expansion in services leads to lower efficiency and higher prices. This could be the case when the service selector is a different party than the payer, so the pricing feedback is broken. A tragedy of the commons essentially.

W00kasz 3y ago

[dead]