Responsibilities of Non-Profit Health Care Organizations

Responsibilities of Non-Profit Health Care Organizations

Nonprofit hospitals "can qualify for federal tax exemption from the Internal Revenue Service (IRS)" (GAO, 2008, p.1). However, nonprofit hospitals should meet the expected qualifying criteria. Nonprofit hospitals must operate in an organized fashion to promote heath while "ensuring that no part of their net earnings inure to the benefit of any private individual, and may not participate in political campaigns on behalf of any candidate or conduct substantial lobbying activities" (GAO, 2008, p.10). Nonprofit hospitals uses different methods "to estimate costs of all community benefit activities; and the methods hospitals may use to measure costs of charity care, government health care programs, and other activities that benefit the community. State data demonstrate that differences in how nonprofit hospitals measure charity care costs and the unreimbursed costs of government health care programs can affect the amount of community benefit they report" (GAO, 2008, p.7).

Ethical Obligations

Nonprofit hospitals have the ethical duty and responsibility of providing healthcare service to the community. The 1969 "IRS's community benefit standard allows nonprofit hospitals broad latitude to determine the services and activities that constitute community benefit" (GAO, 2008, p.7). In the case of Memorial Medical Center (MMC), one of the outpatient services clinics is financially struggling to provide healthcare to the low-income community; nevertheless, the facility has a legal and ethical responsibility to act in the best interest of the community.

Nonprofit Hospitals Tax-Exemption Status

The IRS revenue ruling of 1969 modified the requirements to maintain a tax-exempt status which stated that "nonprofit hospitals were not required to provide charity care to qualify for federal tax exemption, but they must provide a benefit to the community" (GAO, 2008, p.11). The revenue ruling established five items of the community benefit standards for nonprofit hospital to maintain the tax-exempt status are: "(1) the operation of an emergency room open to all members of the community without regard to ability to pay;30 (2) a governance board composed of community members; (3) the use of surplus revenue for facilities improvement, patient care, and medical training, education, and research; (4) the provision of inpatient hospital care for all persons in the community able to pay, including those covered by Medicare and Medicaid; and (5) an open medical staff with privileges available to all qualifying physicians" (GAO, 2008, p.11). However, these are not the determinant factors of the tax-exempt status as it is determined on the basis of the facts and circumstances surrounding each case. (GAO, 2008, p.11)

MMC Options

The management