Dive Brief:
- Many nonprofit hospitals are not living up to their obligations for tax-exempt status by investing in the communities they serve, according to a new survey of nearly 2,400 hospitals by the Lown Institute.
- According to Lown’s 2021 Hospitals Index, the institutions fell short in community investments by nearly $ 17 billion in the past year. There were exceptions, such as Boston Medical Center, which spent $ 11 million more than what Lown believed was an appropriate expenditure. Others include Paradise Valley Hospital in California, the overall top performer in community investment, as well as several New York City-area institutions, including Elmhurst Hospital Center, Queens Hospital Center and Metropolitan Hospital Center.
- However, some 72% of the hospitals surveyed had what Lown called a “fair share deficit” — shortfalls in providing community benefits such as local investments and charity care — ranging from a few thousand dollars to as much as $ 261 million. Many facilities with the largest shortfalls are some of the most prominent hospitals in the U.S.
Dive Insight:
Nonprofit hospitals have faced criticism for enjoying tax-exempt status while not providing enough tangible benefits to the communities they serve. A recent Health Affairs study concluded that nonprofit hospitals spend less on community benefits than for-profit government-owned entities, though industry trade groups like the American Hospital Association contend nonprofits still spend considerably more on community benefits than the tax breaks they receive.
The Lown’s 2021 Hospitals Index puts specific numbers to that deficit.
According to the Lown survey, the benchmark for community benefits should be 5.9% of overall expenditures earmarked toward charity care and other initiatives intended to benefit local residents.
The Cleveland Clinic, New York-Presbyterian Hospital and UC San Francisco Medical Center have the biggest “fair share” annual charity care/community benefits deficits, according to the Lown survey. All had deficits of at least $ 200 million.
Massachusetts General Hospital, the University of Michigan Health System, NYU Langone Medical Center and Vanderbilt University Medical Center all had deficits exceeding $ 150 million. Several other well-known institutions — including Brigham and Women’s Hospital — had deficits exceeding $ 100 million.
“Hospitals say they want to be great community partners, and the ones at the top of our list have followed through,” Lown Institute President Vikas Saini said in a statement. “With the pandemic shining a light on health inequity in America, we need more hospitals to give back as much as they take in tax breaks.”