An Uncertain Prescription : Are Tax Exemptions for Nonprofit Hospitals an Efficient Way to Fund Indigent Care?

Tax exemptions were introduced originally to compensate nonprofit hospitals for providing medical care to the poor. The fact that nonprofit hospitals traditionally provided the only place where the poor could turn for medical care does not imply that nonprofit hospitals are the only guarantors of medical care for today's indigent. Tax exemptions for nonprofit hospitals are just one of several alternatives that offer care to the poor. In this article, we propose that the net contribution of a nonprofit hospital to the community be assessed by examining whether the community would be better off if the nonprofit hospital were stripped of the legal provisions that differentiate it from its for-profit counterparts