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Elizabeth Cooney is a health reporter for the Worcester Telegram & Gazette.
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Wednesday, February 7, 2007

Nonprofit hospitals under fire, report says

As nonprofit hospitals face financial pressures and competition from for-profit health-care providers, their business practices are being challenged in court and in the communities they serve, says a report in tomorrow's New England Journal of Medicine.

More than 100 lawsuits have been filed accusing hospitals of failing to meet their charitable commitments when they charge more to uninsured patients and pursue them for payments, the article said. State attorneys general and the Internal Revenue Service have looked harshly on hospitals that they say have turned into profit-seeking ventures.

Granted tax-exempt status in exchange for providing charitable care, nonprofit hospitals can't compete in the same way as for-profit hospitals when it comes to joint ventures such as free-standing surgery centers, said author Michelle M. Mello, who specializes in health law at the Harvard School of Public Health.

"The public has strong expectations of entities to which it gives tax-exempt status," Mello said. "One is that they are going to provide a community benefit, but also provide care that is just as high-tech as the for-profit hospital. Meeting those two expectations puts hospitals in a difficult position. They're being asked to do a great deal with less flexibility than for-profit hospitals."

Massachusetts has seen less competition between nonprofit and for-profit hospitals than other states because teaching hospitals dominate here. But nonprofits are still under pressure, said Daniel Moen, president and CEO of Heywood Hospital in Gardner and chairman of the board of the Massachusetts Hospital Association.

"It is certainly a very difficult environment for acute care hospitals, especially in Massachusetts, where the operating margins have been very tight or nonexistent," he said. "But in spite of that I am not pessimistic about the future for not-for-profit hospitals. The institutions I'm aware of have done a very good job balancing the whole charitable portion of their mission versus having enough business savvy to be able to make sure the hospital stays strong."

Posted by Elizabeth Cooney at 05:00 PM
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