Nonprofit hospitals in the US received more in tax breaks than they spent on charity care in 2020, with a combined fair share deficit totaling $14.2 billion, according to a report from the Lown Institute. Out of 1,773 private nonprofit hospitals, more than 1,350 spent less on charity care and community investment than they received in tax breaks. The Lown Institute’s report highlights the need for nonprofit hospitals to prioritize social responsibility over profitability and to use tax breaks as intended to promote health, relieve medical debt, and increase access to care.
The Lown Institute has released a report stating that non-profit hospitals in the United States received more in tax breaks than they spent on charity care in 2020. The combined fair share deficit of non-profit hospitals was $14.2 billion, which is enough to relieve the medical debt of 18 million Americans or prevent 600 at-risk hospitals from closing. The Lown Institute used hospitals’ 2020 IRS Form 990 to calculate fair share spending for 1,773 private nonprofit hospitals by comparing the estimated value of their tax exemptions to the amount they spent on financial assistance and community investment.
Out of the 1,773 private nonprofit hospitals, over 1,350 spent less on charity care and community investments than they received in tax breaks, and thus had their fair share of deficits. Vikas Saini, MD, president of the Lown Institute, stated that “Americans desperately need hospitals to use their billions in tax breaks as intended: to promote health while relieving the problems of medical debt and access to care.” “These are charitable organizations, and they should do a better job at prioritizing social responsibility over profitability.”
Many of the hospitals with their fair share of deficits received millions of dollars in COVID-19 relief funding and ended the year with high net incomes. For example, UPMC Presbyterian in Pittsburgh, PA, had the largest fair deficit in the country at $246 million. The facility received $56 million in COVID-19 relief funding and ended the year with a net income of $44 million. The “fair share” deficit could have erased over 167,000 medical debts in the state or prevented 248 rural hospitals from closing. NYU Langone Hospitals in New York, NY, and Vanderbilt University Medical Center in Nashville, TN, followed with fair share deficits of $173 million and $158 million, respectively.
Other hospitals and their fair share of deficits included the Hospital of the University of Pennsylvania (Philadelphia, PA) at $151 million, Indiana University Health (Indianapolis, IN) at $136 million, Spectrum Health Butterworth Campus (Grand Rapids, MI) at $134 million, Cedars-Sinai Medical Center (Los Angeles, CA) at $126 million, M Health Fairview University of Minnesota Medical Center (Minneapolis, MN) at $119 million, Umass Memorial Medical Center (Worcester, MA) at $114 million, and Arizona General Hospital Mesa (Mesa, AZ) at $102 million.
In Massachusetts, Minnesota, Rhode Island, and Washington, DC, the total fair deficit for all hospitals was enough to erase all medical debt on credit reports in each state or district. In 41 states, the total fair share deficit for all hospitals was enough to cover the net losses of all rural hospitals in the state in 2020.
However, not all nonprofit hospitals failed to meet their community investment requirements. Among hospitals that spent more on charity care than the value of their tax exemption, New York Presbyterian Hospital had a fair share surplus of $117 million, Nebraska Medical Center had a surplus of $116 million, and Stanford Health Care had a surplus of $92 million.
The report from the Lown Institute highlights the need for nonprofit hospitals to prioritize social responsibility over profitability. Nonprofit hospitals receive significant tax breaks, and it is important that they use these breaks as intended to promote health, relieve medical debt, and increase access to care. The fair share deficits of nonprofit hospitals in 2020 suggest that some nonprofit hospitals are not fulfilling their charitable missions, and further action may be needed to ensure that non-profit hospitals meet their community investment requirements.
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