Most hospitals are considered charities under common law because they were established for the benefit of the public. The law granted them benefits, but also imposed duties. Under the cy-pres doctrine, if a charitable purpose becomes obsolete or incapable of being carried out, the court could modify those purposes to meet current needs of the organization and the community. Modern laws attempt to find a purpose as near as possible to original purposes set up by donors. In the case of hospital conversion, some regulators say assets must be used to support hospital health care, while others say they can be used in the broad sense of health care. That has been a continuing conflict between communities and regulators.

Since 1996, 30 conversion statutes have been enacted, covering hospitals, HMOs, and insurers.