VIP Treatment at NYU Hospital

Nonprofit and for-profit hospital differ in very few ways--both generally provide the same services and both can be extremely profitable. One dividing line? Charity care. For a federal tax exemption, a nonprofit hospital is supposed to demonstrate that it provides an emergency room open to all, irrespective of ability to pay, and hospital care for all capable of paying, whether they're paying in cash or with Medicaid. (Some states have additional requirements; in Illinois, for example, to qualify for a property tax exemption, a hospital must provide more free and discounted services to certain communities than they would have paid in property taxes during the year.)

As part of its extensive investigation on nonprofit and tax-exempt hospitals, the New York Times reported last week that NYU's emergency room prioritizes VIPs, especially relatives of trustees, donors, and their families. (Unsurprisingly, NYU denies having a VIP program.)

I suppose that technically, providing better ER care to VIPs doesn't, of itself, violate the mandate to provide emergency care irrespective of ability to pay, though the article also says that the ER discourages ambulances from bringing certain classes of indigents to NYU.

Whether or not it's permitted by the tax law, though, it honestly feels unsavory. It's not, after all, like NYU has to provide care for the indigent--if it shifted to a for-profit model, it could do pretty much whatever it wanted. But to the extent it is a nonprofit, tax-exempt hospital, discriminating on the basis of ability to pay seems to undercut the justification for exempting hospitals from taxation.

Samuel D. Brunson  

Photo by Ajay Suresh. CC BY 2.0