Tax Exemption: The Not-for-Profit Difference
A Health Issues Brief that discusses Hospital Tax Exemption: Approximately 60% of hospitals in the U.S., including AdventHealth, are Not-For-Profit (NFP). These hospitals provide high levels of charity care, invest in their communities and offer services often not found in the for-profit sector. The difference between NFP and for-profit hospitals is that NFPs’ earnings are reinvested in the community through the provision of health care services and technologies. By contrast, for-profit hospitals generate profits that return dividends to shareholders.
Investments in community benefit are growing among NFPs. Compared with 2012, teaching hospitals in 2015—most of which are NFP hospitals—spent $3.1 billion (20.14%) more on community benefit despite spending $804 million (16.17%) less on charity care. The decline in charity care is attributed to some states expanding Medicaid coverage.1 As more people became insured, hospitals were compensated for their services, reducing the need for charity care. Hospitals were then able to invest those resources back into the community.