Comment by arjie
6 hours ago
Realistically, non-profit hospitals aren't non-profit because they are altruistic in some sense. It's because that is a tax-efficient structure for them. Given that, the participants in the structure must have a mechanism to extract money from the machine. It's a bit of a cynical view, but I believe many non-profits are organized in this fashion and their vendor contracts are the mechanism of value extraction.
Besides the big tax advantages for the business, there are programs like the 340B Drug Pricing Program - that allow non-profit hospitals to acquire drugs at much lower cost which they can then sell to patients at normal cost. Tools like this make it useful for non-profit hospitals to acquire for-profit hospitals and effectively instantly tune up their margins, which they in fact do.
That makes this just a business operating using a tax-advantaged method, somewhat like Ikea. I think the confusion occurs when people assume 'non-profit' is a public charity that gives away money. In practice, it's just a business structure with certain advantages and constraints.
Assuming that non-profits are altruistic seems fallacious. Granted, I don’t know why they are assumed to be by some; it’s just presented as such because it seems obvious, no arguments need to be given.
It’s clearly fallacious to assume that non-profit is altruistic just because, I don’t know, for-profit is assumed as a premise to be about egotistical money hoarding.
I think the assumption about non-profits being altruistic is a reasonable one, because what would otherwise be the justification for giving them tax breaks?
If the reality is different, then maybe there shouldn't be non-profits anymore. In the UK for example, there are no non-profits, there are only charities. And clearly, the expectation of altruism is explicit here.
Do for-profits become altruistic when corporations get tax breaks? Edit: I’m replying to the “reasonable one” point.
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There are non-profits in the UK. Some of these structures are over 100 years old at this point.
Expectations are completely irrelevant. Charities steal, in the UK the largest charities are essentially run as private companies except the shareholders are employees. Same thing with government, there was a unit of the government that spun out to a "non-profit" structure, some of the civil servants ended up becoming shareholders, and they now lobby their friends in the civil service to use their services...afaik, the government is still their only major customer and they were at, for example, all the pandemic meetings. Just generally, the UK has a vast network of these organizations that have a significant role in government policy but are totally outside the government (this is also true, actually even more so, in devolved countries...to a large extent, government policy there is formed by unelected private institutions).
There are no real rules here beyond humans act self-interestedly. No structure will contain this. This happens in for-profit companies with shareholders too. Principal-agent problem.