Nonprofit hospitals facing scrutiny from Sen. Sanders: Where is the charity care? | BenefitsPRO

By Alan Goforth
October 13, 2023 at 9:35 a.m.

This week, Senator Bernie Sanders released a report calling on Congress and the IRS to strengthen oversight of the tax-exempt status of these hospitals. However, the American Hospital Association said the report was irrelevant.

Sen. Bernie Sanders, I-Vt., has become the latest policymaker to target the tax breaks that nonprofit hospitals receive.

In 2020, nonprofit hospitals received $28 billion in tax breaks in an effort to provide affordable health care to low-income Americans, said Sanders, chairman of the Senate Health Committee, Education, Work and Pensions (HELP). And yet, despite these massive tax breaks, most nonprofit hospitals are actually reducing the amount of charity care they provide to low-income families, even as CEO salaries skyrocket. This is absolutely unacceptable.

Earlier this week, Sanders released a report calling on Congress and the IRS to strengthen oversight of community benefit and charity care spending needed for nonprofit hospitals to maintain their status. The report also describes the majority staff’s review of the financial statements of 16 large nonprofit health systems for fiscal year 2021, for which 12 of them spent less than 2% of their total revenue on charity care .

Of these, six nonprofit health systems Providence St. Joseph, Massachusetts General Brigham, New York Presbyterian Hospital, Cedars-Sinai Medical Center, Allina Health System and Baptist Healthcare spent less than 1% of their total revenue on charity care, according to the report.

Rick Pollack, president and CEO of the American Hospital Association, quickly fired back, saying that tax-exempt hospitals provided $129 billion in total profits to their communities in 2020, which represented about 15.5% of their total expenses.

Today’s report is completely irrelevant and does not fully capture the wide range of community benefits hospitals provide, he said. This tunnel-vision research neglects to consider that under the law, community benefit is defined by much more than charity care and includes patient financial assistance, health education programs and housing assistance, just to name a few.

Under federal law, hospitals are allowed to set their own policies and criteria for charity care, leading to variations in who can receive financial assistance. A KFF report released last year said hospitals reported $28 billion in charity care costs in 2019.

Sanders’ conviction comes amid a wave of state-level oversight of nonprofit hospital spending and new legislation that either better defines charity care, increases spending transparency or sets new minimum thresholds of spending on charity care. Questions have also been raised at the federal level by both parties. In August, Sens. Elizabeth Warren, D-Mass., Raphael Warnock, D-Ga., Bill Cassidy, Md., R-La., and Chuck Grassley, R-Iowa, wrote letters to tax regulators requesting information more detailed on nonprofit hospitals reported charity care and community investments.