Fiduciary Responsibilities in Nonprofit Health Care Conversions

Abstract

Conversions of nonprofit hospitals to for-profit status have been controversial because of concerns that community interests are not represented in the deals. As a result, several states have either passed or are considering conversion legislation. However, dramatic variability among states in approaching conversions remains, including the extent of attorney general intervention. Federal or state legislation could standardize rules for nonprofit conversions, but such comprehensive legislation is unlikely. Instead, this article argues that CEOs and trustees of nonprofit organizations undergoing conversions must honor their fiduciary duties to ensure that a conversion represents community interests.