Nonprofit Newswire | No Special Tax Treatment for Nonprofit Hospitals in Mergers

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June 21, 2010; Source: Nonprofit Law Prof Blog | The intersection of a continuing bad economy and the impending impact of health care reform has spurred an increase in acquisitions and mergers.  The nonprofit hospital community contends that they should get favorable tax treatment during mergers because of their socially beneficial activities.

A review by a trio of University of Pennsylvania law and business scholars suggests that there is “no evidence that nonprofit hospitals are more likely than for-profit hospitals to provide more charity care or unprofitable services in response to an increase in market power.”  Consequently, they think that nonprofit hospital mergers should be treated no differently than other hospital mergers when it comes to antitrust considerations.

Nonprofit hospitals might argue that they provide other kinds of services of community benefits—like public health education for one—beyond charity care and “unprofitable services,” and the new standards of national health insurance reform will be asking nonprofit hospitals exactly what they really do deliver as social benefit for their communities.—Rick Cohen