An Examination of Joint Ventures between Nonprofit Hospitals and For-Profit Businesses

2003 ◽  
Vol 1 (1) ◽  
pp. 41-53 ◽  
Author(s):  
Kent Swift
Keyword(s):  
Board Of Directors ◽  
Joint Ventures ◽  
Joint Venture ◽  
Court Cases ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Tax Exempt

Nonprofit hospitals have increasingly found that it is to their advantage to enter into joint ventures with for-profit entities as a means of raising capital and/or obtaining expertise. A number of IRS letter rulings, revenue rulings, and court cases have addressed the issue of the types of joint ventures between nonprofit hospitals and for-profit entities that are within the hospital's charitable mission and those joint ventures that cross the line and would cause the hospital to lose its status as a tax-exempt entity under I.R.C. §501(c)(3). An examination of this literature suggests that nonprofit hospitals can avoid jeopardizing their charitable status when entering into joint ventures with for-profit entities by (1) requiring the joint venture operating entity to provide care to a broad segment of the community; (2) maintaining control over the joint venture, preferably by controlling a majority of the positions on the operating entity's board of directors; and (3) crafting joint venture agreements such that they place primary importance on the venture's charitable mission.

The Conversion Conundrum: The State and Federal Response to Hospitals’ Changes in Charitable Status

1997 ◽  
Vol 23 (2-3) ◽  
pp. 221-250
Author(s):  
Lawrence E. Singer
Keyword(s):  
Joint Venture ◽  
Low Cost ◽  
State Level ◽  
The State ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Tax Exempt ◽  
Federal Response ◽  
Profit Status ◽  
Hospital Conversions

The pressures encountered by hospitals in the current era of reimbursement declines and stiffened competition are well known. As the “ultimate” payors—primarily employers and government—aggressively continue to seek low cost care, the response of the hospital industry has been to move toward consolidation and efficiency-enhancing mechanisms.Increasingly, nonprofit, tax-exempt hospitals have come to believe that they are at a significant disadvantage vis-á-vis their for-profit brethren in their ability to attract the capital needed to compete in the market. A growing trend among nonprofit hospitals, therefore, is to sell to or enter into a joint venture with a proprietary organization, or alternatively to convert to for-profit status. In 1995, fifty-eight nonprofit hospitals became for-profit; hospital conversions to for-profit status in 1996 are projected to outstrip the pace established the prior year.The conversion trend has not gone unnoticed at the state level. Recently, several states have proposed or enacted laws regulating sales and conversions of nonprofit hospitals, and many more states are contemplating such legislation.

Relation between business satisfaction and board dimensions in joint ventures between Spanish and Moroccan SMEs

2013 ◽  
Vol 44 (3) ◽  
pp. 31-40 ◽  
Author(s):  
E. Argente-Linares ◽  
M. V. López-Pérez ◽  
L. Rodríguez-Ariza
Keyword(s):  
Board Of Directors ◽  
Joint Ventures ◽  
Audit Committee ◽  
Joint Venture ◽  
Low Frequency ◽  
New Markets ◽  
Factors Influencing ◽  
The Board Of Directors ◽  
Structured Questionnaire

Businesses commonly access new markets through joint ventures, and these partnerships may adopt diverse structures of government, among which the Board of Directors often plays a key role. Accordingly, the aim of this study is to observe which characteristics of the Board most affect the success of joint ventures between Spanish and Moroccan SMEs, operating in Morocco. Using a structured questionnaire, we analyse the characteristics of the Board that affect success, as measured by the partners’ satisfaction with the performance achieved. The results show that factors influencing overall partners’ satisfaction with the joint venture include the existence of external directors, the existence of directors with a significant level of ownership in the partnership, the existence of an audit committee, and the (low) frequency of Board meetings. All these measures can be said to be indicators of the type of control held over the partnership, as a means of ensuring the partners’ goals are achieved.

Corporate Reorganization: The Last Gasp or Last Clear Chance for The Tax-Exempt, Nonprofit Hospital?

1988 ◽  
Vol 13 (4) ◽  
pp. 527-559
Author(s):  
Melvin Horwitz
Keyword(s):  
Health Care ◽  
Health Care Organization ◽  
Care Organization ◽  
Nonprofit Hospitals ◽  
Corporate Reorganization ◽  
For Profit ◽  
Not For Profit ◽  
Tax Exempt ◽  
Pros And Cons ◽  
Nonprofit Hospital

AbstractThe current revolution in health care organization and financing, increased competition, and a retrenching of industry from its commitments to expansion of health care benefits challenge the nonprofit hospital's existence as a viable entity. Hospital governing boards and administrators have turned to corporate reorganization in order to maintain their financial position and to continue to serve their communities.This Article examines the not-for-profit concept and the problems facing nonprofit hospitals. It reviews the pros and cons of reorganization and the for-profit/nonprofit controversy. It questions whether the hybridization of the hospital results in a stronger or weaker species and discusses the possible effects of the newly structured entity on the quality and delivery of health care. Finally, the Article suggests that the nonprofit hospital may survive only by a continued commitment to societal and communal values, to service rather than to profit; that this commitment is adequate justificaton for the preservation of the nonprofit system, and its preservation will reinforce and strengthen the concept.

Joint Ventures between Nonprofit and For-Profit Organizations

2000 ◽  
Vol 22 (s-1) ◽  
pp. 76-88 ◽  
Author(s):  
Richard C. Sansing
Keyword(s):  
Joint Ventures ◽  
Joint Venture ◽  
Nonprofit Organization ◽  
Profit Sharing ◽  
Production Costs ◽  
Competition Effect ◽  
Sharing Rule ◽  
For Profit ◽  
Tax Regimes ◽  
Cost Effect

This paper examines the consequences of allowing a nonprofit organization to form a joint venture with a for-profit organization. Three tax regimes are considered: prohibiting all such joint ventures, allowing all such joint ventures, and restricting joint ventures between nonprofit and for-profit entities to those controlled by the nonprofit organization. The paper derives the equilibrium profit-sharing rule, output decision, and organizational form choice under each tax regime. Joint ventures can create both private and social benefits by reducing production costs. They can also create private benefits and social costs by reducing competition. Prohibitions or restrictions on joint ventures can either increase or decrease social welfare depending on whether the production cost effect or the competition effect is more important.

Financial Incentives and Competitive Pressure: The Case of the Hospital Industry

2021 ◽  
Author(s):  
Philippe Choné ◽  
Lionel Wilner
Keyword(s):  
Financial Incentives ◽  
Regulatory Reform ◽  
Hospital Industry ◽  
Competitive Pressure ◽  
Nonprofit Hospitals ◽  
For Profit ◽  
Industry Level ◽  
Market Shares

Abstract In the late 2000s, a regulatory reform dramatically strengthened the incentives of French nonprofit hospitals to attract patients. Exploiting exhaustive data for surgery treatments between 2005 and 2008, and modeling hospitals as supplying utility to patients, we show that increased competitive pressure on nonprofit hospitals caused them to perform more procedures, but did not inflate overall activity at the industry level. Although they have gained market shares over their for-profit counterparts, nonprofit hospitals have been significantly worse off after the reform. To adjust to stronger financial incentives, they incurred an additional effort (pecuniary and non-pecuniary costs) equivalent to about a quarter of their annual revenue.

scholarly journals The Fiduciary Duties of Joint Venture Parties – When do They Arise and What Do They Comprise?

2011 ◽  
Vol 42 (1) ◽  
pp. 117 ◽  
Author(s):  
Jane Knowler ◽  
Charles Rickett
Keyword(s):  
Joint Ventures ◽  
Joint Venture ◽  
Case Law ◽  
The Other ◽  
Common Goal ◽  
Fiduciary Duties ◽  
Fiduciary Obligations ◽  
Australian Case

Joint Ventures are often used by parties in commercial enterprises where parties seek to achieve a common goal. One issue which is increasingly contentious is the extent to which, if any, joint venture parties owe each other fiduciary obligations. This paper refutes, as a dangerous heresy, the idea that joint venture relationships are discrete legal relationships that are inherently fiduciary in nature. The majority of self-styled "joint ventures" are, invariably, nothing more in legal terms than contracts. If parties are going to be bound by fiduciary duties, over and above the contractual duties they owe each other, this will only be so by virtue of the particular arrangement they have entered into which, on a thorough examination of the facts, is found to require each party to give unstinting loyalty to the other. Recent Australian case law bears this out.

The Effects of Not-for-Profit Hospital Reported Profits and Charitable Care on Perceptions of Tax-Exempt Status

2001 ◽  
Vol 23 (2) ◽  
pp. 50-58 ◽  
Author(s):  
Kathryn J. Jervis Wilkicki
Keyword(s):  
Local Property ◽  
Two Dimensions ◽  
Accounting Firms ◽  
For Profit ◽  
Not For Profit ◽  
Tax Practitioners ◽  
State Income Tax ◽  
Tax Exempt ◽  
State Income ◽  
Main Effects

I investigate whether the hospital tax-exemption decision is a function of (1) reported profits and (2) the amount of charitable care provided. Tax practitioners from public accounting firms made decisions about whether the hospital should maintain federal and state income tax and local property tax exemptions. A between-subject design was used with cases at two dimensions: reported profits (high and low) and level of charitable care (high and low). Findings revealed that the main effects of reported profits and charitable care do not independently appear to affect respondents' perceptions about tax exemption. However, when charitable care is low, respondents' perceptions about tax exemption were negatively influenced by high reported profits.

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