Abstract
The hospital industry in the United States has entered a crucible. Though the financial state of nonprofit hospitals has improved recently, many are still struggling to cope with sweeping regulatory reform and a changing healthcare landscape. They are attempting to accommodate a wave of newly insured patients without sacrificing quality of care. Nonprofit hospitals largely enjoy tax exemption, but are facing challenges from state governments in both courtrooms and statehouses. There is widespread dissatisfaction with the status quo. From a tax perspective, the primary problem is that hospitals no longer fit the mold of traditional charitable institutions. When the tax exemption rules were written, hospitals were places where only the indigent sought care, the providers of last resort. They did not charge for their services and were staffed primarily by volunteers. Since then, hospitals have become the nexus of the United States healthcare system. They now host the world’s best doctors and cutting-edge medical technology. And, they have become larger and more business-oriented.