UPDATE: April 13, 2022: The American Hospital Association said in a statement Tuesday the report is "an obvious example of relying on pre-conceived notions and faulty methodology to draw inaccurate conclusions."
The group said hospitals provide many community benefits not included in the report and have stepped up during the COVID-19 pandemic to provide expanded capacity and services like vaccine clinics.
- U.S. nonprofit hospitals often get tax breaks worth far more than they spend on charity care and community investment, according to a new report from the Lown Institute. Prominent systems such as Providence, Trinity Health, Mass General Brigham and the Cleveland Clinic had some of the largest of these "fair share deficits," the healthcare think tank said.
- The Lown Institute found 227 of the 275 hospital systems it studied spent less on charity care and community investment than the value of their tax exemptions. The fair share deficits of all hospital systems studied totaled $18.4 billion, which the institute argues could have been used to address health equity, housing, food insecurity and other local needs.
- Many of the hospital systems also received hundreds of millions of dollars in grant funding through the Coronavirus Aid, Relief, and Economic Security Act in 2020. The 275 systems examined operate more than 1,800 hospitals nationwide.
Nonprofit hospital systems must meet a community benefit standard to qualify for tax-exempt status. The Lown Institute contends that nonprofit systems rarely give back to their communities at a level that justifies the favorable tax treatment they receive.
"Taxpayers should be seeing a better return on their investments and demanding greater accountability," Lown Institute President Vikas Saini said in a statement.
In a study published last April in the journal Health Affairs, researchers at the Johns Hopkins Bloomberg School of Public Health found that nonprofit hospitals spent just $2.30 of every $100 in total expenses on charity care, while government hospitals provided $4.10 and for-profit facilities spent $3.80.
The Lown Institute also published an analysis of hospital spending on charity care and community investment last year. That report claimed that 72% of private nonprofit hospitals spent less on charity care and community investment than they received in tax breaks.
In a response to the 2021 Lown report, the American Hospital Association accused the think tank of cherry-picking categories of community investment while ignoring others, such as research, training and education, and vaccine clinics and outreach during the COVID-19 pandemic.
Hospitals absorb many uncompensated costs in the form of financial assistance to patients and underpayments from government programs such as Medicaid and Medicare, as well as subsidize the high cost of essential services such as burn and neonatal units, AHA said. The hospital lobby said its own 2020 report found that tax-exempt hospitals provided $100 billion in total benefits to their communities in 2017 alone.
For its latest study, the Lown Institute calculated community spending based primarily on 2019 tax filings. To determine a system's deficits and surpluses, it compared the estimated value of its tax exemptions to spending on charity care and community investments such as health improvement activities, contributions to local groups, building activities and subsidized healthcare services.
The 10 private nonprofit hospital systems with the largest fair share deficits in the Lown report were:
- Providence, $705 million
- Trinity Health, $671 million
- Mass General Brigham, $625 million (fiscal year 2018)
- The Cleveland Clinic Health System, $611 million
- University of Pittsburgh Medical Center, $601 million
- University of Pennsylvania Health System, $571 million
- Catholic Health Initiatives, $515 million
- Advocate Aurora Health, $498 million
- Dignity Health, $456 million
- Ascension Health, $388 million
The Lown Institute was founded in 1973 by Nobel Peace Prize winner Bernard Lown, developer of the defibrillator and professor of cardiology at the Harvard T.H. Chan School of Public Health.