zlacker

> Most hospitals are nonprofits, yet they still make substantial profits and overcharge customers.

They don't make large profits otherwise they wouldn't be nonprofits. They do have massive revenues and will find ways to spend the money they receive or hoard it internally as much as they can. There are lots of games they can play with the money, but experiencing profits is one thing they can't do.

>>vel0ci+(OP)
> They don't make large profits otherwise they wouldn't be nonprofits.

This is a common misunderstanding. Non-profits/501(c)(3) can and often do make profits. 7 of the 10 most profitable hospitals in the U.S. are non-profits[1]. Non-profits can't funnel profits directly back to owners, the way other corporations can (such as when dividends are distributed). But they still make profits.

But that's besides the point. Even in places that don't make profits, there are still plenty of personal interests at play.

[1] https://www.nytimes.com/2020/02/20/opinion/nonprofit-hospita...

>>bnralt+p2
This seems like pedantics…? Yes, they technically make a profit, in that they bring in more money in revenue than they spent in expenditures. But it’s not going towards yachts, it’s going toward hospital supplies. Your comment seems to be using the word “profit” to imply a false equivalency

>>bbor+T7
Understanding the particular meaning of each balance-sheet category is hardly pedantry at the level of business management. It's like knowing what the controls do when you're driving a car.

Profit is money that ends up in the bank to be used later. Compensation is what gets spent on yachts. Anything spent on hospital supplies is an expense. This stuff matters.

>>bnralt+p2
> Non-profits can't funnel profits directly back to owners, the way other corporations can (such as when dividends are distributed). But they still make profits.

Then where do these profits go?

>>bnralt+p2
501(c)(3) is also not the only form of non-profit (note the (3))

https://en.wikipedia.org/wiki/501(c)_organization

"Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations"

However, many other forms of organizations can be non-profit, with utterly no implied morality.

Your local Frat or Country Club [ 501(c)(7) ], a business league or lobbying group [ 501(c)(6), the 'NFL' used to be this ], your local union [ 501(c)(5) ], your neighborhood org (that can only spend 50% on lobbying) [ 501(c)(4) ], a shared travel society (timeshare non-profit?) [ 501(c)(8) ], or your special club's own private cemetery [ 501(c)(13) ].

Or you can do sneaky stuff and change your 501(c)(3) charter over time like this article notes. https://stratechery.com/2023/openais-misalignment-and-micros...

>>bbor+T7
https://www.nytimes.com/2023/01/25/podcasts/the-daily/nonpro...

>>scythe+Mb
So from the context of a non-profit, profit (as in revenue - expenses) is money to be used for future expenses.

So yeah, Mayo Cinic makes a $2B profit. That is not money going to shareholders though, that's funds for a future building or increasing salaries or expanding research or something, it supposedly has to be used for the mission. What is the outrage of these orgs making this kind of profit?

>>vel0ci+Ob
Some non profits have very well remunerated CEOs.

>>vel0ci+Ob
One of the reason why companies distribute dividends is that when a big pot of cash starts to accumulate, there end up being a lot of people who feel entitled to it.

Employees might suddenly feel they deserve to be paid a lot more. Suppliers will play a lot more hardball in negotiations. A middle manager may give a sinecure to their cousin.

And upper managers can extract absolutely everything trough lucrative contracts to their friends and relatives. (Of course the IRS would clamp down on obvious self-dealings, but that wouldn't make such schemes disappear. It'll make them far more complicated and expensive instead.)

>>vel0ci+Ob
If you don't have to turn a profit to investors, you suddenly can pay yourself an (even much more astronomically high) salary.

>>vel0ci+Ob
They usually pile up in a bank account of stocks and bonds or real estate assets held by the non-profit.

>>vel0ci+Ob
They call it "budget surplus" and often it gets allocated to overhead. This eventually results in layers of excess employees, often "administrators" that don't do much.

>>icedch+Wr
Or it just piles up in an endowment, which becomes a measure of the non-profit's success, in a you make what you measure, numbers go up sort of way. "grow our endowment by x billion becomes the goal" instead of questioning why they are growing the endowment instead of charging patients less.

>>vel0ci+ze
The word supposedly is doing a lot of heavy lifting in your statement. When it's endowments keep growing over decades and sometimes centuries without being spent for the mission, people naturally ask why the nonprofit keep raising prices for their intended beneficiaries