Why removing the tax breaks for non-profit hospitals could be dangerous

It’s because of the unintended consequences, of course.

In their regular column in Slate, physicians Zachary Meisel and Jesse Pines talk about the recent attention that non-profit hospitals are garnering. The problem is this. Many are acting like for-profits, and in some cases, have been caught mistreating the uninsured and those who are on Medicaid.

So, when money is tight, you hear stories like this one a few weeks ago in the Boston Globe, which takes another shot at their favorite target, Partners HealthCare.

But threatening the tax breaks of non-profit hospitals can backfire. For instance, they can simply respond by simply cutting their losses and declaring themselves for-profit. And the results would be disaster to patients. Indeed, as Drs. Meisel and Pines write, “By discontinuing the ‘community benefit’ charade, they could choose to serve only those with good insurance and diseases that reimburse well. For-profit specialty hospitals don’t have all-purpose E.R.s to service the community, nor do they maintain unprofitable services such as general medicine and psychiatry. This would clearly reduce access for many patients who need hospital services for serious but low-paying conditions: diabetic complications, congestive heart failure, pneumonia, severe schizophrenia. Driving nonprofit hospitals to become for-profit specialty hospitals probably won’t improve the population’s health.”

Again, regulation brings the specter of unintended consequences, which always has the potential to make the situation worse than it already is.