Responsibilities of Non-profit Healthcare Organizations

In 2006, 59% of the hospitals in the US were nonprofit. As you learned
in the GAO report on nonprofit hospitals, to maintain this tax-exempt
status, a hospital must provide benefit to the community, but there is
some latitude by the IRS and other governmental agencies about what
qualifies as community benefit.

In this Discussion, you will analyze the extent to which a nonprofit
hospital is legally and ethically responsible to provide community
benefit, using the ACHE decision-making model to guide your analysis
of the following scenario:

The management team of Memorial Medical Center must make a decision
regarding the continuation of one of its outpatient clinics. To
provide better community service, MMC developed three outpatient
clinics throughout a large metropolitan area. Over the past several
years, one of the clinics has consistently been a financial loser. The
losses have grown even as the costs of maintaining the clinic have
increased. A primary reason for the negative financial performance is
the high amount of non-reimbursed healthcare services—the clinic
provides needed health care to a low-income part of the metropolitan
area. Several members of the executive management team believe MMC has
no alternative other than closing the clinic. One member of the
management team, however, believes that the situation raises ethical
concerns, and that the executive team seeks an ethics-grounded
response to the problem. (Nelson, p. 9)

To prepare for this Discussion:

Review the GAO report (,
paying particular attention to its discussion about criteria for
nonprofit status.

Review the article “An Organizational Ethics Decision-Making Process,”
and apply the steps of the decision-making model to this scenario,
going into more detailed analysis than is already provided in the
article. What options does this hospital have? Clarify your ethical
reasoning for each option.(Article: Nelson, W. A. (2005). An
organizational ethics decision-making process. Healthcare Executive,
20(4), 8–14. Retrieved from

If you were an administrator at MMC, what decision would you make?

Post by Day 3 a response to the following:

Are the clinics helping MMC maintain its tax-exempt status? In what respect?

What are some of the options for MMC in this scenario? Which option do
you think MMC should choose? What is the ethical reasoning that leads
you to this conclusion?

Discuss the ethical obligations of nonprofit hospitals, in general, to
benefit the community. Is it acceptable, do you think, for a hospital
to do the bare minimum to maintain its tax-exempt status? Explain your
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