'Fair share' deficits: Hospitals get billions more in tax breaks than they give to communities, report says

Nonprofit hospitals are getting billions more in tax breaks than they are providing to their communities, according to a new report from the Lown Institute.

The organization, a think tank that has been critical of hospital spending practices, says more than three-quarters of the nonprofit hospitals it examined have “fair share” deficits. In those hospitals, the Lown Institute says the value of their tax breaks outweighs their community investments. The institute released its new report Tuesday morning.

The total “fair share” deficit of more than 1,350 hospitals amounted to $14.2 billion in 2020, according to the Lown Institute. Put another way, that’s enough money to eliminate the medical debt for 18 million Americans or ensure that 600 rural hospitals at risk of closing wouldn’t have to shut their doors, the institute says.

In a similar report released a year ago, the Lown Institute said the fair share deficit of nonprofit hospitals in 2019 was $18.4 billion.

Vikas Saini, president of the Lown Institute, called on hospitals to do more to help their communities.

“Americans desperately need hospitals to use their billions in tax breaks as intended: to relieve the problems of medical debt and access to care,” Saini said in a statement. “These are charitable organizations and they should do a better job at prioritizing social responsibility over profitability.”

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Hospitals have said they don’t agree with the Lown Institute’s conclusions, citing many community benefits that aren’t captured in the organization’s analysis.

Nationwide, hospitals have provided $745 billion in uncompensated care to patients in need since 2000, the American Hospital Association has said. Rick Pollack, the AHA’s president, said last year that the Lown Institute’s analysis omits contributions such as medical research and training programs for physicians and nurses.

In its new report, the Lown Institute says it pored over the numbers of 1,710 nonprofit hospitals, and said more than 1,350 had “fair share” deficits.

The institute says it examined tax documents filed with the IRS and compared hospitals’ tax breaks with the financial assistance and community investments they provide, including activities to improve community health, contributions to community groups, community building efforts and subsidized healthcare services.

Saini called for greater oversight of nonprofit hospitals and their contributions to their communities.

“Nonprofit hospitals aren’t going to change their behavior on their own,” Saini said in a statement. “These hospitals are supposed to be accountable to federal, state, and local authorities—but oversight has been negligible.”

The institute said that it didn’t include some large providers in its analysis because IRS records weren’t available. Those providers left out of the analysis include Providence, Kaiser Permanente, Mass General Brigham, Cleveland Clinic and Henry Ford.

These are the five hospitals with the largest fair share deficits, according to the Lown Institute.

1. UPMC Presbyterian Shadyside

Fair share deficit $246 million

2. NYU Langone Hospitals

Fair share deficit: $173 million

3. Vanderbilt University Medical Center

Fair share deficit: $158 million

4. Hospital of the University of Pennsylvania

Fair share deficit: $151 million

5. Indiana University Health

Fair share deficit: $136 million

(Editor's note: This story has been updated. The Lown Institute revised some of its figures and calculations on the size of its "fair share" deficits and the order of the schools with the highest deficits.)