A recent article in The New York Times highlighted a policy at New York University Langone hospital, a nonprofit hospital, which gave preference to the wealthy for treatment in its emergency room.
NYU’s hospital had set up a special room (Room 20) to treat those whose lives were in danger, as well as VIPs. According to the Times article, “for years, NYU’s emergency room in Manhattan has secretly given priority to donors, trustees, politicians, celebrities and their friends and family.”
That could be a big problem, because nonprofit hospitals get significant federal tax breaks and, in return, are supposed to benefit the community.
An entity’s nonprofit status not only provides these tax breaks, but often also provides other legal privileges (like limited immunity from tort liability and exemption from state employment programs), says Heather Rhoades, a principal at Cummings & Lockwood LLC in West Hartford, Conn. So nonprofit hospitals must be very careful about not favoring one group over another, she said.
Although it’s not clear whether the Internal Revenue Service independently monitors these actions, if the IRS or a court were to revoke NYU’s nonprofit status, Rhoades said that based on the revocation, all the benefits listed above that apply to nonprofits would be lost.