Nonprofit hospitals have grown into a $1.3 trillion industry, generating nearly $45 billion in tax-free “profits” in 2023. Researchers have estimated that the total annual tax benefit flowing to nonprofit hospitals reached $37.4 billion in 2021 — including $11.5 billion in federal income taxes that Uncle Sam simply forgoes. In exchange for this enormous subsidy, nonprofit hospitals are supposed to provide charity care and community benefits, such as subsidized health services or training of medical professionals. Many don’t come close to earning their keep.
A 2022 study by a team of economists found that 86 percent of nonprofit hospitals did not provide more charity care than the value of their tax exemption. Nearly 40 percent failed to provide a wider array of community benefits that exceeded the value of the tax subsidy they received. We may not know the scale of the problem because, as a Government Accountability Office report noted, the IRS “does not have a method to track how many hospitals have actually been audited based on potential noncompliance with community benefits.”
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K-12 Tax, $pending, governance and election climate: Kelda Roys, WEAC and Healthcare Cost Disease