3 ms·

Isn’t the distinction that non-profit hospitals have to plow surplus’s revenue back into the hospital versus distributing profit to investors / owners? If so,

Isn’t the distinction that non-profit hospitals have to plow surplus’s revenue back into the hospital versus distributing profit to investors / owners? If so, the tax exempt status seems aligned with how for profit businesses are taxed?

INTPenis 3y ago
They can just create their own medical equipment supplier and funnel money that way. Bottom line is that when you let privat businesses decide they will always choose profit over people.
- lupire 3y ago
  Where is the funnel? The for profit supplier pays taxes, and the expenses are deductible.
  - INTPenis 3y ago
    They can charge whatever they want, sort of like they already do for medicine.
    - nobodyandproud 3y ago
      Not to mention that NP doesn’t prevent certain administrative and executive employees from getting excessive salaries.
      - AnthonyMouse 3y ago
        But then they pay personal income tax on the salaries. Which is the same thing that would happen to the equipment supplier. You're in no way avoiding the tax, you're just having the equipment supplier pay it on their profits.
        nobodyandproud 3y ago
        Not at all. The tax rates aren’t the same and non-profits aren’t forbidden from hiring businesses for contracts, pooling money, buying property, nor securing loans. It’s a good model for small NPs. It’s rife for large scale corruption at the scale of hundreds or thousands of employees. The point is that we see executive salaries for NPs that match salaries for for-profits. That indicates a broken system.
        AnthonyMouse 3y ago
        > The tax rates aren’t the same At anything that could be considered a "high" salary, the personal income tax rates are higher than the corporate rates. Also, they would be exactly the same if the for-profit entity was an LLC or some other passthrough entity. > non-profits aren’t forbidden from hiring businesses for contracts, pooling money, buying property, nor securing loans. Neither are for-profit businesses. And then any businesses they hire would also be paying taxes on their profits. > The point is that we see executive salaries for NPs that match salaries for for-profits. That indicates a broken system. It indicates that the cost of hiring someone who knows how to run a hospital is the same regardless of whether you separately pay profits to shareholders.
billy_bitchtits 3y ago
margin is mission
paradox242 3y ago
A guy a worked with once did some time as an IT contractor at one of the large hospitals here in town (they are almost all now owned by the same organization) and he was telling me how this works in practice. Since they have to spend all of them the money on "improvements" it ends up on things like the wall-sized $40k television his team of 5 put in a room in a conference room in a basement that no one ever uses.
- lostlogin 3y ago
  This sounds more like an internal issue than a legal one. Departments spending all their budget in the last month of the financial year, thereby justify the following year’s budget has been a thing forever.
  - AnthonyMouse 3y ago
    It's clearly either incompetence or corruption. There is no way a hospital couldn't find a legitimate use for spending an arbitrarily large amount of money. You treat more indigent patients or buy another MRI machine etc.
paulmd 3y ago
No. Non-profit hospitals can accumulate endowments just like non-profit universities. And that endowment usually goes into real estate or other investments, just like any other large pool of money.

INTPenis 3y ago

They can just create their own medical equipment supplier and funnel money that way. Bottom line is that when you let privat businesses decide they will always choose profit over people.

lupire 3y ago
Where is the funnel? The for profit supplier pays taxes, and the expenses are deductible.
- INTPenis 3y ago
  They can charge whatever they want, sort of like they already do for medicine.
  - nobodyandproud 3y ago
    Not to mention that NP doesn’t prevent certain administrative and executive employees from getting excessive salaries.
    - AnthonyMouse 3y ago
      But then they pay personal income tax on the salaries. Which is the same thing that would happen to the equipment supplier. You're in no way avoiding the tax, you're just having the equipment supplier pay it on their profits.
      - nobodyandproud 3y ago
        Not at all. The tax rates aren’t the same and non-profits aren’t forbidden from hiring businesses for contracts, pooling money, buying property, nor securing loans. It’s a good model for small NPs. It’s rife for large scale corruption at the scale of hundreds or thousands of employees. The point is that we see executive salaries for NPs that match salaries for for-profits. That indicates a broken system.
        AnthonyMouse 3y ago
        > The tax rates aren’t the same At anything that could be considered a "high" salary, the personal income tax rates are higher than the corporate rates. Also, they would be exactly the same if the for-profit entity was an LLC or some other passthrough entity. > non-profits aren’t forbidden from hiring businesses for contracts, pooling money, buying property, nor securing loans. Neither are for-profit businesses. And then any businesses they hire would also be paying taxes on their profits. > The point is that we see executive salaries for NPs that match salaries for for-profits. That indicates a broken system. It indicates that the cost of hiring someone who knows how to run a hospital is the same regardless of whether you separately pay profits to shareholders.

billy_bitchtits 3y ago

margin is mission

paradox242 3y ago

A guy a worked with once did some time as an IT contractor at one of the large hospitals here in town (they are almost all now owned by the same organization) and he was telling me how this works in practice. Since they have to spend all of them the money on "improvements" it ends up on things like the wall-sized $40k television his team of 5 put in a room in a conference room in a basement that no one ever uses.

lostlogin 3y ago
This sounds more like an internal issue than a legal one. Departments spending all their budget in the last month of the financial year, thereby justify the following year’s budget has been a thing forever.
- AnthonyMouse 3y ago
  It's clearly either incompetence or corruption. There is no way a hospital couldn't find a legitimate use for spending an arbitrarily large amount of money. You treat more indigent patients or buy another MRI machine etc.

paulmd 3y ago

No. Non-profit hospitals can accumulate endowments just like non-profit universities. And that endowment usually goes into real estate or other investments, just like any other large pool of money.