Credibility is Key…Let’s Not Lose It for Business Purposes

A recent article coming from Becker’s Review discussed an important issue surrounding the credibility of philanthropy and nonprofits but didn’t discuss anything regarding fundraising.

This article dealt with the issue of how hospitals are being required to list their prices for nearly every procedure (inpatient and outpatient) or any other expense one might incur related to a healthcare need. The federal government, through Health and Human Services, has mandated that any organization which takes government money, including Medicaid or Medicare, must abide by its directive to list these expenses. 

This issue historically (of listing prices) first started several years ago and in some ways became a running joke because hospitals would bury these price lists on unlisted pages not linked to anything on their websites, making them impossible to find. They also would use certain codes to describe the types of procedures or expenses, ones that no one could figure out. Eventually, the federal government issued an order stating this information had to be easily found and very clear to understand.

Based on this regulatory decision, many hospitals are beginning to indicate they will choose to pay the $300 per day fine charged by the government rather than actually list their prices for care. Basically, it’s better for the bottom line to pay the fine than it is to actually release information intended to create a more competitive healthcare market.

One might be able to argue that this is a good business decision. To be honest, I don’t have enough information to either make or fight that argument. And now, you might be asking how this relates to philanthropy.

This is all about credibility. While there’s no question a non-profit hospital, or university, or any large non-profit in general, has nearly every single potential problem (finance, legal, HR, compliance, etc.) as a for-profit company, it’s hard to argue that raising money philanthropically, which is based on trust, isn’t adversely affected if the hospital won’t disclose its required financial information. The tax benefit for a large non-profit hospital, not having to pay both federal and local taxes, can run into the hundreds of millions of dollars, depending on the size of the organization or system. But when hospitals aren’t open as a part of this “tax-free deal,” it may well shred possible and potential trust that philanthropy depends upon. How are we supposed to ask someone to philanthropically support an organization’s need when the organization can’t be somewhat open (as prescribed by law) to how the work is done or how much it costs?  There are enough challenges in this industry without the self-imposed ones being added on top.