State policy issues in nonprofit conversions

The increasing number of nonprofit hospitals and health plans converting to for-profit enterprises, public concern, and media attention have brought conversions to the top of state policy agendas. Conversions raise public policy issues because nonprofit corporations' legal status obligates them to operate in the public interest, their tax subsidies should not inure to the benefit of private interests, and they often represent unique community resources providing valuable services. This paper describes legal authority that states can use to oversee conversions and outlines several policy issues facing state regulators that could be addressed by new legislation.