Responsibilities of Nonprofit Health Care Organizations

The existence of nonprofit healthcare organizations is essential in the provision of affordable healthcare to many Americans who would otherwise find it hard to get treatment elsewhere. These organizations are therefore very important and according to Dewar (2009) they are divided in to three main categories. The first are organizations which are populated by a general membership in a specific industry and a very good example of this is the American Medical Association. The second category comprises of those organizations which are mandated to provide services towards a specific therapeutic problem such as cancer, diabetes, among others and an example of this is the American Cancer Society. The third and final category are nonprofit organizations which are founded and operated by private citizens whose main aim is to help anyone they choose to help and one of the most prominent of these organization is the World Vision Foundation.

The GAO Report on nonprofit hospitals states that the Federal tax exemption for charitable organizations has been in existence since the beginning of the federal income tax law and it is based on the assumption that the loss of government tax revenue is offset by the ability of these charitable organizations to provide for the population’s welfare. One of the greatest beneficiaries of this tax exemption system has been the nonprofit hospitals due to the belief that the promotion of medical healthcare especially to the poor is a charitable function and should be exempted from taxation. The IRS et al (1993) states that one of the main conditions for this exemption is that these hospitals should be organized and operated exclusively for the purpose of the provision of health and that all the income it generates should not go to the benefit of individuals within this organization but should be put back into pursuing the main objectives of such an organization. Furthermore, nonprofit hospitals do not have to provide free medical services in order to qualify for tax exemption so long as they provide services to the community which will reduce the government’s financial burden. In relation to this, the clinics operated by the Memorial Medical Center help it to maintain its tax exemption status due to the fact that these clinics were opened for the purpose of providing better healthcare services to the communities within which they are situated. The operation of these clinics provides it with the means for it to ask for exemptions because they provide the services which the government should be providing and it has also been seen that the provision of these services comes at great expense to the Medical Center considering the losses that are incurred in one of the clinics.

The article An Organizational Ethics Decision-Making Process by William Nelson looks at the steps that can be undertaken by the Memorial Medical Center when making decisions that are related to ethics in order to satisfy all the stakeholders in making the decision of whether to close a loss making clinic or not. The first which is to be considered is the clarification of the ethical issue in question and the parties involved should be able to declare the specific areas where they are in disagreement. The second step is the identification of all the affected stakeholders and giving them the opportunity to express their views concerning the ethical issue involved. A third step is understanding the issues surrounding this ethical conflict and this requires fact finding missions to find out exactly what its root cause is, be it medical, financial, or the community. The fourth step is the identification of the ethical perspectives that are relevant to this conflict from the different views from which it can be seen. The fifth step is the identification of the different options that are open to respond to this issue such as adopting new strategies to stop the financial drain that it has been experiencing. The sixth step is the analyzing the different options identified in the previous step to look for their merits and demerits and to determine whether the opinion of one stakeholder appears to be stronger that those of all the others. The seventh step is to share and implement the decision with all the people concerned. The eighth step is the reviewing of the decision to see whether its implementation managed to achieve the desired goals that it was intended to achieve. There are several options open to the Medical Center including the following: keeping the loss making clinic open and continue running it at a loss, appealing to the government for more tax exemptions in order to get more funds to run this clinic, and finally, it can decide to close the clinic. I believe that the Medical Center should choose the second option because it will enable it to be able to continue operating the clinic with minimal or no losses at all due to the fact that it is getting more tax exemptions. It would not be ethical for the Center to close up its clinic because many people living in that area rely heavily on it due to its affordability.

Nicholson et al (2000) states that it is the ethical obligation of non-profit hospitals to provide medical healthcare to all the people who come to it not only to maintain their tax-exempt statuses but also as a way of contributing to the society.  It is therefore not acceptable for such a hospital to only do the barest minimum to maintain its exemption status because that can only be considered to be illegal. Instead, it should do its utmost to provide the necessary services to justify why it should have any tax-exemptions.

Cited Works

Dewar, D.M. (2009). Essentials of Health Economics. Burlington, MA: Jones and Bartlett Learning.

Government Accountability Office. (2008). Report to the Ranking Member, Committee on Finance, U.S. Senate. Retrieved from http://www.gao.gov/new.items/d08880.pdf

Nelson, W.A (2005). An organizational ethics decision-making process. Healthcare Executive, 20(4), 8-14.

Nicholson, S., Pauly, M. V., Burns, L. R., Baumritter, A., & Asch, D. A. (2000). Measuring community benefits provided by for-profit and nonprofit hospitals. Health Affairs, 19(6), 168-77. Retrieved from http://0search.proquest.com.alice.dvc.edu/docview/204632733?accountid=38376

Tax exemption granted to nonprofit charitable hospitals that accept payment for services rendered.(1997). The Appraisal Journal, 65(4), 420-420. Retrieved from http://0search.proquest.com.alice.dvc.edu/docview/199949607?accountid=38376

United States Internal Revenue Service. Statistics of Income Division, American Statistical Association. (1993). Statistics of Income: Turning Administrative Systems into Information Systems. Washington D.C: Government Press.