Besides the big tax advantages for the business, there are programs like the 340B Drug Pricing Program - that allow non-profit hospitals to acquire drugs at much lower cost which they can then sell to patients at normal cost. Tools like this make it useful for non-profit hospitals to acquire for-profit hospitals and effectively instantly tune up their margins, which they in fact do.
That makes this just a business operating using a tax-advantaged method, somewhat like Ikea. I think the confusion occurs when people assume 'non-profit' is a public charity that gives away money. In practice, it's just a business structure with certain advantages and constraints.
It’s clearly fallacious to assume that non-profit is altruistic just because, I don’t know, for-profit is assumed as a premise to be about egotistical money hoarding.
The bottom line is that - people do not get to choose their illness. So a capitalist model in Adam Smith's sense where people get to 'choose' their 'insurance' based on price and benefit is an illusion. It would be like having identical futures contracts on a commodity from different brokers with the only difference being the commission structure. The underlying product is the same and in fact regulated by law.
Legally, are non profits allowed to do mergers and acquisitions ?The hospitals are becoming monolithic monopolies.
My own employer has been burnt by consultants essentially moving the deck chairs around to the tune of $800 an hour
I suspect if someone internally made the same suggestions they'd be shot down, but only because they didn't cost so much
With that being said, consultants have no skin in the game, and thier incentives are aligned more towards executive relationship management and seeking out new opportunities for revenue vs. achieving aspirational metrics that ultimately matter to a health system.
I work in medtech and a model that I am more hopeful for is attaching consulting servics with capital purchaes. (e.g. siemans, GE). This model puts skin in the game from the manufacturer as outcomes and ultimately future revenue is tied to being able to show improvement on key clinical, financial, and operational metrics.
Curious to see if this study design can be applied under this scenario (search for press releases regarding signed partnerhsips with medtech and examine a narrower set of outcomes identified in those press releases).
It may not be wise to assume non-profits exist within the confines of the law that authorizes their continued existence, but I don't see how it's fallacious.
[0]: https://www.irs.gov/charities-non-profits/charitable-organiz...
I think it's been stated in this thread, and I learned it reading the comments on HN, but consultants are not hired to optimize processes but instead to provide decision insurance. If you take a big risk by yourself and it goes poorly, your job and reputation are on the line. If you hire a consulting firm that advises you take the risk, and report that the risk is properly characterized and understood, and then it goes wrong - well sometimes the best laid plans fall victim to circumstance.
However once such a tax category was created, there was really nothing to stop the sociopathic MBA class from using them as just another optimization tool in their tax-minimization arsenal. Another example is non-profit schools where the property is owned by the founders and they charge hugely non-market rents to personally extract revenue from the non-profit.
So in current days we have both genuine altruistic endeavors (they still exist) and the predatory ones abusing the system.
Hospitals are opex constrained for things that don’t generate revenue. The operations run lean and are focused on operating. There’s no bench in finance or IT or whatever to figure stuff out. Enter the consultant.
Consulting is often tied to capital spend and most importantly they go away when the job is done.
I submit my thesis. The PE/consultant class. A crust of slime buoyed about on the waves of capital to provide cover for the horrors underneath.
If the reality is different, then maybe there shouldn't be non-profits anymore. In the UK for example, there are no non-profits, there are only charities. And clearly, the expectation of altruism is explicit here.
I also am aware of a situation where a pair of business consultants who were meant to be assisting with a software project were diverted (at full rate 1200/day) to assisting with redecorating an office.
I was directly involved, oppositionally, to a pair of business analyst consultants who tried to get a customer of mine to change their (admittedly terrible) vendor selection by repeating security concerns over and over again in the meeting. They never actually got to the point of analysing said terrible vendors terrible integration practices or costing up a migration path. They just banged on about security and contacted us separately after the meeting asking for more details about the security situation.
Basically you get out of it, what you want to get out of it. It depends on the consultant, their education, and the terms of their engagement. I don't know if statistics would be useful in this scenario or how you would control for wildly different outcomes.
Apparently the only helicopter noise some residents like is the sound of their own, ferrying them to BFI so they can go to Aspen for the weekend.
Well, McKinsey still existing? Too much influence. Otherwise they would have gone like so many other consulting companies.
You are now a fully trained management consultant. (Alan Johnson, Peep Show)
In recent decades, management consulting firms have become a fixture in the American healthcare system, wielding outsized influence compared to most other economic sectors. Hospitals navigating challenging financial and regulatory landscapes may call on these specialists for advice on strategic planning, cost-cutting, reorganizations, or revenue-boosting initiatives.
A new paper published in JAMA is the first large-scale, empirical attempt to determine the scale and impact of hospital investment in management consultant services.
“This initial analysis suggests that consultants may deliver neither the dramatic efficiencies they promise nor the harms that critics sometimes fear,” said first author Joseph Dov Bruch, PhD, Assistant Professor of Public Health Sciences at the University of Chicago.
Bruch and his colleagues combed through IRS Form 990 filings, which (among other detailed financial disclosures) require nonprofits to describe their five largest external contracts costing over $100,000 each year. Using machine learning, the researchers identified hospital contracts with management consulting firms, compared 306 hospitals that initiated contracts with management consultants between 2010-2022 with a matched group of hospitals that did not, and then analyzed differences in finances, staffing, operations, and patient outcomes.
Over 20% of all nonprofit hospitals engaged management consultants during the study period. In total, the sector spent at least $7.8 billion on management consulting services over roughly a decade, with the average hospital spending $15.7 million — money that might otherwise be used for patient care, facility improvements, or community health programs.
“It’s not necessarily a waste, but we don’t have evidence of meaningful improvements,” said Bruch, who has spent years studying how nonprofit hospitals function in highly financialized markets.
Across metrics such as net patient revenue, operating margin, days of cash on hand, and even claims-based patient outcomes like readmission and mortality rates, there were no statistically significant or systematic changes linked to nonprofit hospitals hiring a management consulting firm. The only exception was a small increase in stroke readmissions — a slight negative effect.
The authors also point out that their current analysis was limited specifically to management consultants, but they recommend greater transparency and public accountability for how hospitals use tax-subsidized dollars on a broader level. When other types of consultants such as HR and IT consultants are included, the total sum spent by nonprofit hospitals reached more than $25 billion in the study period.
“Our study urges hospital executives toward greater caution about how money is spent on management consultants, and it demonstrates the need for additional research on how these contracts may or may not meaningfully impact health systems,” Bruch said.
In addition to informing hospital leaders and policymakers, Bruch says this research was motivated in part by his role as a mentor and adviser. As a health policy professor, he frequently fields questions from students considering healthcare management consulting as a career path.
“Students who genuinely want to make meaningful changes in the healthcare system ask me if management consultants can actually reduce inefficiencies, and whether I would personally encourage that type of professional pursuit,” Bruch said. “Answering those questions has been difficult because the evidence has been so limited. I’m hopeful more research on consultants will help people make more informed decisions about careers in healthcare.”
“Changes in Nonprofit Hospitals' Finances, Operations, and Quality of Care After Using Management Consultants” was published in JAMA in May 2026. Co-authors are Joseph Dov Bruch, Cal Chengqi Fang, Yan Bo Zeng, Avni Parthan & Ashvin D. Gandhi.
Afaik, their job is to give management the cover managment thinks it needs to do the things it wants to do or thinks it needs to do.
The article claims the study says the billions spent on management consultants didn't move any metrics significantly, other than a small negative change for stroke readmissions.
Expectations are completely irrelevant. Charities steal, in the UK the largest charities are essentially run as private companies except the shareholders are employees. Same thing with government, there was a unit of the government that spun out to a "non-profit" structure, some of the civil servants ended up becoming shareholders, and they now lobby their friends in the civil service to use their services...afaik, the government is still their only major customer and they were at, for example, all the pandemic meetings. Just generally, the UK has a vast network of these organizations that have a significant role in government policy but are totally outside the government (this is also true, actually even more so, in devolved countries...to a large extent, government policy there is formed by unelected private institutions).
There are no real rules here beyond humans act self-interestedly. No structure will contain this. This happens in for-profit companies with shareholders too. Principal-agent problem.
Like someone else pointed out, if people are hiring them in order to provide cover for decision making, then maybe the whole thing being a charade is the point.
To be more explicit: Given that for-profits can be given tax-breaks for (hopefully) good reasons, what would be the reason to give non-profits tax-breaks, if not for altruism? After all, as you point out yourself, you can get tax-breaks also as a for-profit, so you don't need non-profits just for that reason.
If you want to make progress in USA you must separate the crazy left from the moderate left, if you defend the people who want to ban private medicine then you aren't going anywhere. Those aren't your allies even if they pull in a similar direction, even if they sit in the same party in the two party system.
That is what it implies, there are many in the world who want to ban for profit healthcare and end pay discrimination between jobs. Nobody would ask that question in earnest, its just a rhetorical question to make a point.