The Lown Institute, a think tank, says healthcare systems aren’t giving out enough aid to help those in need, particularly in light of lucrative tax incentives.
Some nonprofit health systems are receiving tax breaks that far surpass the value of their charity care or community-based programs, according to a new report from the Lown Institute.
Overall, some of the nation’s most esteemed systems are getting billions more in tax breaks, according to the institute, a think tank that regularly reports on how hospitals use their resources. Earlier this year, the group released a report examining disparities in pay among the chief executives at nonprofit hospital systems, even at systems of similar sizes.
The new report, released Tuesday, identified a number of systems that offered charity care far exceeding the value of their tax breaks.
The Lown Institute evaluated what it terms “fair share deficits” by examining the 2019 data health systems submitted to the Internal Revenue Service. Systems with such deficits received tax incentives that outweighed their charity care and other services and assistance provided to the community.
The group found that 227 of the 275 systems (82%) studied had fair share deficits. The total fair share deficit of the systems amounted to $18.4 billion, according to the institute.
The 10 systems with the largest fair share deficiits accounted for $5.6 billion of the fair share deficit. Each of the top seven on the list had a fair share deficit topping $500 million.
Vikas Saini, president of the Lown Institute, said the findings raise important policy questions about using public funds differently to help people in need.
“Would half a billion in taxpayer dollars be better spent by directly funding addiction, food insecurity, or homelessness efforts?” Saini said in a statement that accompanies the report. “We should all be asking those types of questions given the vastness of these sums and the significant public health crises many communities are facing.”
Hospitals have said the Lown Institute's findings don’t accurately capture the full scope of benefits and services provided to their communities.
Rick Pollack, the American Hospital Association’s president, issued a statement Tuesday defending the work and services provided by hospitals, pointing to the work done during the COVID-19 pandemic.
Pollack called the Lown Institute report "an obvious example of relying on pre-conceived notions and faulty methodology to draw inaccurate conclusions."
“The report cherry-picks categories of community investment while simply ignoring others, such as researching life-saving treatments and cures and training and educating the next generation of caregivers," Pollack said in the statement. "It overlooks many of the essential contributions hospitals make to their communities that are critically important, especially during the pandemic.”
Nationwide, hospitals have provided $745 billion in uncompensated care to patients in need since 2000, the hospital association said last year. He also noted the vital role of hospitals in the COVID-19 pandemic, developing coronavirus tests and expanding capacity to deal with the influx of patients.
These 10 private, nonprofit hospitals systems had the largest fair share deficits, according to the Lown Institute analysis.
These 10 health systems had the biggest “fair share surpluses,” the institute said. The charity care and community programs these health systems provided surpassed their tax breaks by a considerable amount. Each in this top 10 had a surplus of at least $50 million, and the total surplus for the 10 organizations exceeded $800 million.
The Lown Institute also criticized some institutions for accepting millions in federal COVID-19 relief (CARES Act funding), even while having healthy revenues.
The institute pointed to two systems that took relief aid but posted more than $1 billion in surplus revenue.
The Cleveland Clinic received $423 million in CARES Act money, while posting $1.3 billion in surplus revenue in 2020. The University of Pittsburgh Medical Center accepted $761 million in COVID-19 relief aid; the system posted $1.1 billion in excess revenue, the institute said.
The University of Pennsylvania Health System took $213 million from in COVID relief money, but banked $387 million in surplus revenue, according to the Lown Institute.
“Taxpayers should be seeing a better return on their investments and demanding greater accountability,” Saini said.