Does the nonprofit form fit the hospital industry?

Nonprofit hospitals currently enjoy favored legal status. In this Article, Professor Clark critically examines the basis for such preferential treatment. He begins by identifying endemic problems in the health care industry and then explores the relationship between nonprofit hospitals and these problems. He finds that the evidence does not persuasively establish that nonprofit hospitals serve as fiduciaries rather than exploiters, and that nonprofits engage in much involuntary cross-subsidization of medical services. He concludes that the legal favoritism for the nonprofit form is based not on sound reasoning and hard data but on intuition. Professor Clari proposes that the legal rules affecting nonprofit hospitals reflect this reality by treating both nonprofits and for-profits neutrally, by controlling cross-subsidization, and by strengthening consumers' information about and control over health care decisionmaking.