Armchair Finance

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Give It Away, Now

When the economy is in questionable shape, people have a harder time buying things. And when people have a harder time buying things, retailers have to cut prices. Nevertheless, even when that time-honored strategy doesn't help, there's one thing you won't see retailers doing: giving things away.

Why harp on retail sales in a healthcare business magazine? As I said, retailers won't resort to handing out free merchandise. But could you imagine anything like that happening in healthcare? I didn't think I could either. But now I can. Politicians, who are always looking for new sources of revenue, and regulators, who never met a rule they didn't like, may eventually force hospitals to do something retailers would never consider--give away goods and services.

I was recently talking to a consultant about hospitals' nonprofit status--she's convinced something is going to happen on a nationwide scale that would force hospitals to prove they meet a benchmark standard of community benefit to preserve their tax-exempt status. If hospitals can't meet such a standard, they would not only face the specter of paying taxes, but a whole cascade of other problems--such as the inability to issue tax-exempt bonds to finance big projects.

No need to worry just yet. If you have a sneaking suspicion that what your hospital does to deserve its tax-exempt status might not be enough--and Francine Machisko, a senior principal with the Noblis Center for Health Innovation, thinks a lot of you might be in that category--you still have time to get your house in order. She doesn't expect new regulations before the next election. But after, she thinks there's enough bipartisan support on this issue to set some sort of minimum national standard.

So who might be on the hook?

"I would think that it wouldn't be so much the teaching hospitals," Machisko says. "They provide a fair amount of charity care and community benefit simply based on where they are [located primarily in inner cities]. "I suspect that the ones more at risk would be community hospitals or parts of health systems that operate in affluent areas. "They will have to go out looking to provide charity care."

Can you imagine an electronics store giving shoppers flat-screen TVs free of charge? Can you imagine hospitals searching for customers to whom they might give free care? The latter might happen. Still, Machisko thinks most hospitals would welcome some sort of reasonable benchmark. "Congress isn't looking to put hospitals out of business. I would expect the minimum standard will truly be minimal."

What's reasonable, however, might be in the eye of the beholder.

-Philip Betbeze

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