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CEO: Different Types of Hospital Ownership

February 01, 2022

Scott Thoreson, CCMH Chief Executive Officer

by Scott Thoreson, CCMH Chief Executive Officer

In my previous role in Minnesota, I was a consistent contributor to the local newspaper and I heard enough feedback from my December article to continue this activity in Carrollton. When I was first interested in the CEO opening in Carrollton, I initially thought that Carroll County Memorial Hospital was a governmentally-owned facility, but it isn’t. There are several types of hospital ownership across the United States and with these different ownership types come unique characteristics. I thought I would pass along some information to help educate area residents, especially as I was initially confused about the ownership status of CCMH.

Across the country there are hospitals that are owned by municipalities, counties, hospital districts which span a certain geography, not-for-profit organizations – such as CCMH, for-profit organizations, and the Veterans Administration. Often governmentally-owned hospitals, such as municipal or hospital districts, rely to some degree on taxes levied against property owners to help provide the revenue to pay for the various expenses to operate the hospital. CCMH as a not-for-profit organization still has to make a “profit,” as in having revenues in excess of expenses in order to stay in business. The same can be said for churches and many settings for education. CCMH does not receive property tax funding and instead relies mainly on revenue from services provided to pay expenses and plan for the future.

For-profit hospitals have to pay property tax and sales tax, governmentally-owned and not-for-profit hospitals don’t pay property or sales tax. For-profit hospitals have shareholders who invest in the hospital or corporation and expect dividends to be paid and share prices to increase. Not-for-profit hospitals don’t have shareholders and the “profits” are used solely to improve the hospital, its equipment and add needed services. Hospitals also partner to address community needs that take place outside the walls of the hospital, but ultimately impact the health status of area residents.

The not-for-profit status of hospitals also requires those organizations to accept all patients who present to the emergency department, whether or not they are able to pay for their care. CCMH does have a Financial Assistance Plan for individuals who are not able to pay for their care and we do promote this plan. Unfortunately, we have many patients who qualify for up to a 100 percent reduction in their hospital bills, but they choose not to complete the minimal paperwork. As of our last completed fiscal year, we provided approximately $450,000 in uncompensated care, not counting the underpayments from governmental programs such as Medicaid and Medicare.

I hope you have learned a little bit about hospitals that you didn’t know before. If you have a question you would like explained in more detail, please submit that request to Stay well!

More in this Series:

CEO: Holiday Message (Published December 20, 2021)