Nonprofit hospitals facing Sen. Sanders scrutiny: Where’s the charity care?
This week, Sen. Bernie Sanders released a report calling on Congress and the IRS to strengthen oversight of these hospitals’ tax-exempt status, however, the American Hospital Association said report is “off base.”
Sen. Bernie Sanders, I-Vt., has become the latest policymaker to target the tax breaks enjoyed by non-profit hospitals.
“In 2020, non-profit hospitals received $28 billion in tax breaks for the purpose of providing affordable health care for low-income Americans,” said Sanders, who is chair of the Senate Health, Education, Labor and Pensions (HELP) Committee. “And yet, despite these massive tax breaks, most non-profit hospitals are actually reducing the amount of charity care they provide to low-income families, even as CEO pay is soaring. That is absolutely unacceptable.”
Earlier this week, Sanders released a report calling on Congress and the IRS to strengthen oversight of the community benefit and charity care spending necessary for non-profit hospitals to retain their status. The report also outlines the majority staff’s review of 16 major non-profit health systems’ financial statements for fiscal year 2021, for which 12 dedicated less than 2% of their total revenue to charity care.
Among those, six non-profit health systems — Providence St. Joseph, Massachusetts General Brigham, New York Presbyterian Hospital, Cedars-Sinai Medical Center, Allina Health System and Baptist Healthcare — dedicated less than 1% of their total revenue to charity care, according to the report.
Rick Pollack, president and CEO of the American Hospital Association, quickly fired back, saying tax-exempt hospitals offered $129 billion in total benefits to their communities in 2020, which amounted to about 15.5% of their total expenses.
“Today’s report is totally off base and does not fully account for the wide range of community benefits that hospitals provide,” he said. “This tunnel-visioned `research’ neglects to consider that under the law, community benefit is defined by much more than charity care and includes patient financial aid, health education programs and housing assistance, just to name a few.”
Under federal law, hospitals are permitted to establish their own charity care policies and criteria, leading to variations in who can receive financial assistance. A KFF report issued last year said hospitals reported $28 billion in charity care costs in 2019.
Related: Senators ask IRS to launch probe of nonprofit hospitals’ tax-exempt status
Sanders’ condemnation comes amid a wave of state-level scrutiny over non-profit hospital spending and new legislation that either better defines charity care, increases spending transparency or sets new minimum charity care spending thresholds. Questions also have been raised at the federal level by both parties. In August, Sens. Elizabeth Warren, D-Mass., Raphael Warnock, D-Ga., Bill Cassidy, M.D., R-La., and Chuck Grassley, R-Iowa, wrote letters to tax regulators requesting more-detailed information on non-profit hospitals’ reported charity care and community investments.