Sunday, August 17, 2008

Do Nonprofit Nursing Homes Provide Better Care?

With all the debate surrounding the tax-exempt status of nonprofit hospitals, the question of how ownership might affect services provided by nursing homes often gets ignored in the press. This article in today's Hartford Courant, however, explores the issue. Though placed in the context of nursing home services in Connecticut, the article explores the broader issues of ownership form in nursing homes, and suggests that staffing levels for nonprofit homes are higher than in for-profit chains, leading to better patient services. The story notes, however, that the percentage of Medicaid patients in a particular home might also be a major factor in predicting patient service levels in nursing homes.

Federal tax exemption law has been largely static in this area. The last major IRS ruling defining the requirements for a tax-exempt "home for the aged" was issued in 1972 (Revenue Ruling 72-124), and unlike nonprofit hospitals, there has been little written in the legal academy about exemption for nursing homes and the policy issues involved. One of our blog editors, David Brennen, has been among the few legal academics to explore tax-exemption policies as they apply to homes for the aged (see this article), though there are a fair number of empirical studies of the effects of nursing home ownership done by health care professionals and academics. Some of this empirical research is summarized by Mark Schlesinger and Bradford H. Gray in How Nonprofits Matter In American Medicine, And What To Do About It, 25 Health Affairs W287 (2006) (web exclusive; subscription required to retrieve full article).


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