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From Elisabeth Rosenthal in Monday’s WAPO:
One owns a for-profit insurer, a venture capital company, and for-profit hospitals in Italy and Kazakhstan; it has just acquired its fourth for-profit hospital in Ireland. Another owns one of the largest for-profit hospitals in London, is partnering to build a massive training facility for a professional basketball team, and has launched and financed 80 for-profit start-ups. Another partners with a wellness spa where rooms cost $4,000 a night and co-invests with “leading private equity firms.”
Do these sound like charities? These diversified businesses are, in fact, some of the country’s largest nonprofit hospital systems. And they have somehow managed to keep myriad for-profit enterprises under their nonprofit umbrella — a status that means they pay little or no taxes, float bonds at preferred rates and gain numerous other financial advantages.
Through legal maneuvering, regulatory neglect and a large dollop of lobbying, they have remained tax-exempt charities, classified as 501(c)(3)s.
“Hospitals are some of the biggest businesses in the U.S. — nonprofit in name only,” said Martin Gaynor, an economics and public-policy professor at Carnegie Mellon University. “They realized they could own for-profit businesses and keep their not-for-profit status. So the parking lot is for-profit; the laundry service is for-profit; they open up for-profit entities in other countries that are expressly for making money. Great work if you can get it.”
Many universities’ most robust income streams come from their technically nonprofit hospitals. At Stanford University, 62 percent of operating revenue in fiscal 2023 was from health services; at the University of Chicago, patient services brought in 49 percent of operating revenue in fiscal 2022.
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darryll k. jones
