Nonprofit Hospitals: Better Standards Needed for Tax Exemption

GAO discussed the role played by nonprofit hospitals in providing charitable services to indigent populations. GAO found that: (1) some hospitals are reducing their provision of indigent care and other charitable activities; (2) for many nonprofit hospitals, the link between tax-exempt status and the provision of charitable activities for the poor or underserved is weak; (3) large urban teaching and public hospitals provided a disproportionate share of compensated care; (4) it was not uncommon for nonprofit hospitals' strategic goals to resemble those of for-profit institutions; and (5) currently, the Internal Revenue Service has no requirements relating hospitals' charitable activities for the poor to their tax-exempt status.