In this Discussion, you will analyze the extent to which a nonprofit hospital is legally and ethically responsible to provide community benefit.

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.
  • 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 reasoning.




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