Where do profits from non-profit hospitals go?
VOV.VN - Most people generally don’t think of hospitals as money makers, and sometimes they’re right — most hospitals around the globe are not considered businesses operating with the overarching goal to make money.
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The study found that seven out of the top 10 most profitable hospitals in the US operate under the non-profit model. Even so, each of the seven earned more than US$150 million in 2013.
The clear majority of hospitals around the globe lose money, but there are a few that are very profitable and people need to pay close attention to why these hospitals are making so much, said the lead author of the study, Gerard Anderson, a health policy professor at Johns Hopkins Bloomberg School of Public Health.
Anderson and co-author Ge Bai looked at the net income for patient-care services for 2013, the most recent year for which fiscal information was available. They excluded any profits the hospitals earned from ancillary services and activities including donations, investments, parking fees, and sales from gift shops, as these are often used to subsidize patient-care.
All hospitals should make a little profit, said Bai, who is an assistant accounting professor at Washington and Lee University, but some are raking in outrageously outlandish amounts of money.
The study revealed that hospitals that are part of a larger system of hospitals providing healthcare were generally more profitable due to their ability to dominate the local market, as well as negotiate higher insurance rates.
Anderson suggested that hospitals using the non-profit model lower their prices or invest more of the money back into the community.
Recently Vingroup JSC announced plans to purportedly change the model for its Vinmec Healthcare System and International Hospital from that of a profit oriented business to that of a non-profit organization.
It’s important to note right up front that Vingroup did not pledge to reduce prices nor take steps to make healthcare more affordable to the average Vietnamese patient. In fact, to the contrary, reps clearly said in making their announcement that they have every intention of continuing to make a profit.
However, they pledged to use 100% of the profits for ‘reinvestment in society’ as some media outlets have reported.
Vingroup JSC committed to spending 100% of the profits from Vinmec and Vinschool, a private education system, to invest in system development and enhancement, particularly human resources development, scientific research, technology transfer and infrastructure.
Nothing in these stated objectives differs from that of a profit oriented business.
But is Vingroup JSC a separate legal entity from Vinmec and what moneys does it plan to make from Vinmec’s future operations?
Under general principles of non-profit organizations as used by other countries around the globe,in order for Vinmec to be recognized as a non-profit it must be a separate entity with its own legal identity.
This means literally that Vingroup JSC relinquishes all ownership interests in Vinmec.
The founders of a non-profit such as Vingroup JSC are also not permitted to make a profit or benefit from the net earnings of Vinmec. They can make money in various other ways, however, including receiving compensation.
Vingroup JSC hasn’t been transparent and clarified what, if any moneys, it will make off Vinmec from such items as management fees, rental income or compensation for services in the form of wages or salaries, etc.
In summary, if Vingroup JSC truly wants Vinmec to adopt a non-profit model and benefit from reduced taxes on its earning, why doesn’t it simply just reduce the fees it charges patients?
Where will the profits from the non-profit hospital truly go?
