Tax breaks higher than community investments for most non-profit hospitals

More than 1,900 non-profit hospitals received more in tax breaks than they spent on community investments and financial assistance, according to an analysis from the Lown Institute.

The Lown Institute used IRS tax filings for fiscal year 2021 to calculate fair share spending for 2,425 private non-profit hospitals.

Although federal, state, and local laws require non-profit hospitals to direct savings toward community investments in exchange for tax-exempt status, 80 percent of hospitals gave back less to their communities than they received in estimated tax breaks.

Among these hospitals, the fair share deficits totaled $25.7 billion—enough to pay off the medical debt of everyone in California, Texas, New York, and Pennsylvania combined.

The ten hospitals with the largest fair share deficits ended the year with over one hundred million dollars in net income. New York-Presbyterian Hospital had the highest fair share deficit of $274 million and reported a net income of $285 million.

The remaining nine hospitals with the highest fair share deficits are as follows:

• UPMC Presbyterian - $268 million
• NYU Langone Hospitals - $222 million
• Cleveland Clinic Main Campus - $212 million
• Massachusetts General Hospital - $194 million
• Stanford Hospital - $181 million
• Mayo Clinic Hospital $165 million
• Hospital of the University of Pennsylvania - $163 million
• Vanderbilt University Medical Center - $156 million
• Brigham and Women’s Hospital - $149 million

Hospitals spent an average of 3.87 percent of their budgets on community investment. This figure ranged from 0.25 percent at the Hospital of the University of Pennsylvania to 8.84 percent at North Shore University Hospital. New York-Presbyterian spent 2.02 percent of its budget on community investment.

Across health systems, Kaiser Permanente had the largest fair share deficit of $1.2 billion, followed by Providence with $1 billion. Among the ten systems with the greatest fair share deficits, five are Catholic health systems: Providence, CommonSpirit ($923 million), Trinity ($784 million), Ascension ($614 million, and Bon Secours Mercy ($488 million).

The hospital with the largest fair share surplus—meaning its spending on community investments exceeded the value of its tax exemption—was Lakeland Regional Medical Center in Lakeland, Florida, with $194 million. The other nine hospitals with the highest fair share surpluses included:

• Summit Healthcare Regional Medical Center - $159 million
• The Nebraska Medical Center - $112 million
• Hackensack University Medical Center - $96 million
• North Shore University Hospital - $93 million
• Jersey Shore University Medical Center - $83 million
• Grady Memorial Hospital - $71 million
• Mount Sinai Hospital - $67 million
• Englewood Hospital and Medical Center - $64 million
• Saint Francis Hospital $54 million

The health system with the highest fair share surplus was Hackensack Meridian Health ($358 million), followed by Nebraska Medicine ($119 million) and Christus Health ($108 million).

The Lown Institute published a policy brief in conjunction with the report highlighting actions that would improve transparency and accountability among non-profit hospitals.

The brief said hospitals should be required to report spending on community benefit programs directly related to priority health needs identified in the hospital’s Community Health Needs Assessment. Hospitals should also have to report community benefit spending by facility rather than system and report the value of their tax exemption.

Additionally, hospitals should have a minimum threshold of meaningful community benefit spending based on their financial positions, previous spending, and local needs.