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Healthy Profits: Non-Profits and Profitability.

Updated on: 2/26/2019

The big revenues at Seattle’s nonprofit hospitals.   Nonprofit medical facilities that are making billions/millions of dollars in earned income.  

The big revenues at Seattle’s nonprofit hospitals. Nonprofit hospitals in Western Washington are respected members of the community.  They save lives during life-threatening emergencies; they help heal serious illness; and they provide good jobs for thousands of medical professionals.

Nonprofit hospitals can’t profit, right?  Think again.  Nonprofit hospitals can and do generate profits. They just can’t distribute those profits to owners or shareholders like for-profit businesses do.  Instead nonprofit hospitals must reinvest profits back into their organizations.

Despite the recession nonprofit hospitals generate some of the nation’s largest profit margins and they have amassed billions of dollars in cash reserves.  Why?  Because nonprofit hospitals benefit each year from a loophole that is worth billions of dollars: Nonprofit hospitals pay no income taxes, no property taxes and no sales taxes.  And there are no laws that limit profits, charges for goods and services, or executive pay for nonprofit hospitals.

And there are other ways that nonprofit hospitals differ from private businesses: they don’t answer to stockholders; they don’t compete on price; they don’t tell customers what they charge in advance.  Thus, there is no accountability

Nonprofit hospitals are not just surviving.  Seattle’s nonprofit hospitals are growing and thriving.  And critics contend that as they grow they are straying from their charitable roots.  If they wanted to they could afford to make medical care less expensive for everyone.  But instead they are stockpiling money.

Adam Searing, project director for the N.C. Health Access Coalition says. “they started as these social welfare experiments, with all this commitment. ... What they should work for is that no person has to go bankrupt or lose their house to pay their hospital bills.”
Critics say that nonprofit hospitals have become part of the problem by consolidating into large hospitals systems that negotiate ever higher payments from insurance companies.  The result is patients and employers end up paying more for treatment and insurance – in many cases a single medical emergency or catastrophe can be financially devastating to the patient and their families.

Despite the recession, all of Seattle’s nonprofit hospitals are more profitable than a decade ago.

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