A nonprofit hospital means the facility does not pay either state or local property taxes or federal income taxes because it is considered a charity, and proves certain community benefits in accord with state and federal guidelines.
A for-profit, or investor-owned, hospital means the facility is either owned by private investors or is owned publicly by shareholders and is part of a company that issues shares of stock to raise revenue to expand the hospital activities. For-profit hospitals have historically been based in the southern part of the United States, particularly in Florida and Texas. But in recent years, investor-owned hospitals have expanded nationally, purchasing often financially distressed facilities or stand-alone hospitals that are in need of access to capital for expansion. Depending on economic conditions, for-profit hospitals can have better access to capital than nonprofits that expand by issuing debt through tax-exempt bonds.
The Congressional Budget Office (CBO) found that “on average, nonprofit hospitals provided higher levels of uncompensated care than did otherwise similar for-profit hospitals. Among individual hospitals, however, the provision of uncompensated care varied widely, and the distributions for nonprofit and for-profit hospitals largely overlapped. Nonprofit hospitals were more likely than otherwise similar for-profit hospitals to provide certain specialized services but were found to provide care to fewer Medicaid-covered patients as a share of their total patient population. On average, nonprofit hospitals were found to operate in areas with higher average incomes, lower poverty rates, and lower rates of un-insurance than for-profit hospitals.”
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