Approximately 60% of the hospitals in the US were created within the legal context of not-for-profit status. This tax-exempt status has been enjoyed by healthcare facilities around the country as Government subsidies were awarded after World War II for mostly religious-affiliated entities providing care in local communities. One of the criteria in awarding tax-exempt status to these acute care facilities was the agreement to provide care for the indigent/uninsured population.
The rollout of the Affordable Healthcare Plan has probably sent more than a few hospital administrators scurrying to read their original charter and wording in sections dealing with compliance for tax-exempt status. Although it was common to agree to return to the community a percentage of care provided to the indigent/uninsured, a significant reduction in the true number of uninsured may eliminate much of what many hospitals have historically treated as indigent care.
Current lawsuits around the U.S. are contesting the validity of certain tax-exempt organizations, and hospitals have no immunity to such threats. The status in each case may well come down to interpretation of indigent care, community service, and outreach that is a service to the community but is provided at no expense to the public.
From a pure mathematical standpoint, a hospital that is providing 3% of revenue in indigent care could be acquired by a for-profit, charging for that same 3%, increasing revenues by that amount while removing a percentage of the previously expensed figure, depending on scope of services.
There are too many variables in the attractiveness of not-for-profit hospital acquisition by for-profits to assume this would alone shift the landscape, but added to the existing scenarios, I would not be surprised to see the percentage of not-for-profits begin to shrink through this decade.
