Aspen Valley Hospital – A nonprofit hospital making a difference in our community
April 25, 2016
Deborah Breen, President & CEO Aspen Valley Hospital Foundation
There is a lot of discussion about how Aspen Valley Hospital (AVH) operates and what it means when the hospital, a non-profit district hospital, makes a "profit." I was recently asked about this very subject, and I thought it would be a good topic to cover in this column.
For-profit hospitals versus non-profit hospitals: What is the difference? Perhaps the biggest difference is that non-profit hospitals gain tax-exempt status by meeting guidelines set by state and federal governments to ensure these hospitals are providing benefits to their surrounding communities. These benefits often take the form of providing charity care and community education. For-profit hospitals don’t get these tax benefits.
Furthermore, whether publicly traded or owned by private investors, for-profit hospitals are owned by individuals who expect to earn a profit from their investment dollars. In contrast, no board member at AVH receives any compensation for their services. They are 100% volunteer driven, and this five-member board is also an elected board, similar to a school board. Any "profit," or positive operating margin earned by a non-profit organization, is reinvested into the organization to support such things as new technology, facility upgrades, education, and training. Another key differentiation is that for-profit hospitals typically make strategic decisions regarding what services to provide based on profitability. Non-profit hospitals, such as AVH, make decisions based on community need — even if that means some services operate at a loss.
Non-profit hospitals also provide a greater proportion of uncompensated care than do their for-profit counterparts. In fact, certain federal laws have been established to ensure that no matter what the tax-status of a hospital, all hospitals who accept Medicare funding must evaluate and treat as appropriate any patient presenting in their emergency departments. This is known as the Emergency Medical Treatment and Active Labor Act (EMTALA), or "anti-dumping" law.
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Enacted by Congress in 1986, EMTALA was designed to impose specific obligations on Medicare-participating hospitals that offer emergency services to provide a medical screening examination when a request is made for examination, or treatment for an emergency medical condition regardless of an individual's ability to pay. If a hospital is unable to stabilize a patient within its capability, or if the patient requests, an appropriate transfer should be implemented.
Non-profit hospitals like AVH, because of their charitable mission to offer services based on need and not on profitability, continue to be challenged with finding the funds necessary to purchase new technology, maintain and upgrade facilities, and keep pace with the escalating costs of recruiting high-quality staff and physicians. Thus, particularly over the past three decades, non-profit hospitals have turned their attention to developing philanthropic efforts as a way to close this gap.
This was the driving force in 2012 behind AVH creating its own dedicated 501(c)(3) foundation, Aspen Valley Hospital Foundation, to focus its efforts solely on raising funds for the current and future needs of AVH. The newly formed foundation's first project was to launch a $60 million capital campaign to support the extraordinary building and modernization project currently underway, while also developing other areas of the overall fundraising program.
The needs of Aspen Valley Hospital continue to outpace available funding. Philanthropy is proving to be an effective way to close that gap so that AVH can continue to provide the needed services our community depends on.