As explained in above questionsthat tax exempt status releases the nonprofit hospital from paying taxes andprovide good income to their employees for their services and could useresources to provide services for the community benefit. In instance, byproviding free medical services to indemnity population, rendering financialsupport to the Medicare and Medicaid beneficiaries who are unable to pay forthe services. Moreover, tax-exempt status also encourages more poor patients toseek treatment from the nonprofit hospital and helps hospital to maintain thecharity care.In thistechnology world, non-profit organization could use money to update thestructure of institution, add more medical technology to provide high qualitycare to people who cannot afford to pay for such services in for-profithospitals.
In addition to it, tax-exempt status will also allow to save themoney to hire more primary care which is a big requirement in United StatesHealth care system.We all know thateverything has pros and cons, therefore, tax exempt status put certainregulations on non-profit hospitals. These regulations were designed byInternal revenue services for providing quality of care to poor and low-incomepeople. Hospital has to maintain tax-exempt status by participating in any kindof community services, rendering services to Medicaid and Medicarebeneficiaries. In addition to it, they must not be supported by any donation orany little income from gifts. Moreover, they could not be expecting any rewardor pay for the service they provide to their beneficiaries or other uninsuredpopulation.
If Internal Revenue Service’s ever found that any nonprofit organizationis violating any one of these regulations, then it has the right to take awaythe tax-exempt status. On the other hand,for for-profit organizations, to maintain tax-exempt status they are bound withsome regulations: they have to participate in any community benefit services orrendering services to Medicare and Medicaid beneficiaries plus must pass integralpart doctrine. In this regulation it has to show that after acquisition with otherhospital both entities are separate and tax bearing entities. Therefore, it willbe ambiguous to say that tax-exempt status is worth to hospitals because it hasadvantages as well as disadvantages to both for-profit and non-profitorganization.