Nonprofit classification decisions in response to threshold-based charity care incentives

Melvin A. Lamboy-Ruiz, Donald Lien and Pamela C. Smith

Advances in accounting, 2021, vol. 53, issue C

Abstract: We examine how the threat of losing income tax-exemption affects U.S. nonprofit hospitals' misclassification of the components of uncompensated care when the hospitals (i) are required to provide charity care subject to a minimum threshold in exchange for keeping the tax-exemption, (ii) are reimbursed for their bad debts, and (iii) can misrepresent their privately observed information regarding bad debts and charity care provided. Using an analytical model, we illustrate the optimal misclassification strategies of bad debt and charity care.

Keywords: Healthcare; Hospitals; Nonprofits; Charity care; Bad debts (search for similar items in EconPapers)
JEL-codes: I18 I38 M41 M48 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0882611021000134
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:53:y:2021:i:c:s0882611021000134

DOI: 10.1016/j.adiac.2021.100525

Access Statistics for this article

Advances in accounting is currently edited by Dennis Caplan

More articles in Advances in accounting from Elsevier
Bibliographic data for series maintained by Catherine Liu ().