Nonprofit hospitals are supposed to give back to the community to justify their tax breaks
Nonprofit hospitals are given massive tax breaks in order to give back to their communities and help keep the local population healthy. But a report from the Lown Institute found that of the 275 systems studies, 227 of 275 spent less on charity care and community investment than the value of their tax exemption.
Adding up the deficits across all the hospital systems results in more than $18 billion that could have been used to advance health equity, housing, food insecurity, and other local needs.
The report ranked these 10 private nonprofit hospital systems as having the largest deficits between what they receive in tax breaks and what they give back to their communities in fiscal year 2019:
These 10 systems account for $5.6 billion of the $18.4 billion total fair share deficit.
“Would half a billion in taxpayer dollars be better spent by directly funding addiction, food insecurity, or homelessness efforts?” said Vikas Saini, MD, president of the Lown Institute, in a statement. “We should all be asking those types of questions given the vastness of these sums and the significant public health crises many communities are facing.”
Many systems with these deficits had their financial positions further supplemented with CARES Act funding, according to Lown Institute’s experts. For example, the Cleveland Clinic Health System accepted $423 million in funds while posting $1.33 billion in surplus revenues in 2020. The University of Pittsburgh Medical Center accepted $761 million in COVID funds as they posted $1.1 billion in surplus revenues. And the University of Pennsylvania Health System accepted $213 million from the CARES Act while ending the year with $387 million in excess revenue.
“At the end of the day, some of these hospital systems are walking away with over a billion in government funds,” said Saini. “Taxpayers should be seeing a better return on their investments and demanding greater accountability.”
Lown Institute calculated fair share spending based on 2019 IRS Form 990. For systems in which 2019 data were not available, data from 2018 were used. Fair share deficits and surpluses for each system were calculated by balancing the estimated value of hospital systems’ tax exemptions against the amount systems spent on charity care and community investment— including community health improvement activities, contributions to community groups, community building activities, and subsidized healthcare services. Only private nonprofit hospitals with available IRS data were included in the analysis.