Lies You Believe Series (Part 2)

Lies You Believe Series (Part 2)

Here’s a lie you believe: Not-for-profit hospitals don’t make a profit.

…Not really.

“Not-for-profit” means they don’t pay tax.  That’s what it really means.

And what a competitive advantage that grants a hospital when they have no tax burden whatsoever. Imagine what your life would be like if you did not pay taxes at all. How would your standard of living change?

You can tell these so-called not-for-profit hospitals are interested in making a profit just by looking around and seeing all of the billboard advertisements, or seeing television advertisements during the Super Bowl, or watching them buy out physician practices in an effort to maximize their market share in a community.

“Not-for-profit” means “does not pay tax.” So how do they achieve the accounting fiction of not making a profit? Well, they do this by looking for red ink wherever they can find it. You see, many of these not-for-profit hospitals are making so much money, they have to find red ink wherever they can. Even if they have to invent it with fictional, gigantic hospital charges.

What they don’t collect, they write off as a loss, which helps them maintain the fiction of their not-for-profit status. This is a lie I think many of you believe, and it’s a good one to start out with. We’ll see you next time.