New Senate Finance Committee Majority Staff Report Critical of Nonprofit Hospitals

This week the majority staff of the Senate Finance Committee issued a report titled Executive Charity: Major Non-Profit Hospitals Take Advantage of Tax Breaks and Prioritize CEO Pay Over Helping Patients Afford Medical Care. From the introduction to the report (citations omitted):

[H]ospitals have gladly accepted the tax benefits that come with nonprofit status but have failed to provide the required community benefits. Non-profit hospitals spent only an estimated $16 billion on charity care in 2020, or about 57 percent of the value of their tax breaks in the same year. Those hospitals have made information about their charity care programs difficult to access, leaving many patients unaware that they may qualify for free or discounted care. Some hospitals also aggressively try to collect from patients through practices that verge on extraordinary collection practices. One recent study found that in 2017, non-profit 2 hospitals billed $2.7 billion to patients who were likely eligible for charity care. At a time when a record number of Americans report delaying medical care due to high costs, those choices from well-resourced hospitals ensure that future patients, including those who qualify for charity care, will hesitate before they seek necessary care out of a fear of accruing medical debt. That is unacceptable.

Not surprisingly, the American Hospital Association quickly responded with its own study, announced in a press release titled Tax-Exempt Hospitals Provided Nearly $130 Billion in Total Benefits to Their Communities. The press release begins:

Even in the face of a once-in-a-century pandemic, all hospitals, regardless of ownership type, continued to provide a comprehensive range of benefits, programs and essential services to their communities. New analysis released today by the American Hospital Association (AHA) shows that tax-exempt hospitals provided more than $129 billion in total benefits to their communities in 2020 alone; the most recent year for which comprehensive data is available. The analysis calculates that tax-exempt hospitals’ and health systems’ total community benefits were 15.5% of their total expenses in 2020, based on data from the Internal Revenue Service.

Coverage: Axios; The Hill; Law360 (subscription required).

Photo credit: Mary Free Bed. (Memorial Hospital in South Bend, Indiana)

Lloyd Mayer