Nonprofit hospitals provided more than $149 billion in community benefits in 2022 — more than 11 times the value of their federal tax exemptions — according to a November analysis from the American Hospital Association and EY.
The estimated federal tax revenue forgone due to nonprofit hospital tax exemptions was $13.2 billion in 2022, while the total value of community benefit provided was nearly $149 billion, according to the report. That benefit includes financial assistance, unreimbursed Medicaid costs, community health improvement initiatives, research and in-kind contributions.
When adding state and local tax exemptions, total tax benefits for nonprofit hospitals were estimated at $54.4 billion, still just one-third of the total community benefit provided that year.
The report comes amid heightened scrutiny of nonprofit hospitals’ tax-exempt status from lawmakers, regulators and advocacy groups. Leaders at nonprofit health systems argue the debate underscores the need for more transparency — and education — around what nonprofit hospitals contribute to their communities.
“This is a topic that has been getting more attention across the country,” Rob Allen, president and CEO of Salt Lake City-based Intermountain, told Becker’s in June. ” think there’s a misperception that nonprofits don’t pay taxes. We do. But the crux of the issue is that, in exchange for some tax breaks, nonprofits commit to giving back to the community at least the value of those breaks through community benefit.”
In 2023, Intermountain paid $469 million in taxes and contributed $746 million in community benefit — more than double the value of the tax break it would have received if it were structured as a for-profit, Mr. Allen said. Including additional investments not counted toward tax benefit reporting, the system’s total community contribution exceeded $1.3 billion.
“The nonprofit model carries with it a hope and a promise,” Mr. Allen said. “The hope is that we’ll be here when the community needs care, and the promise is that when someone seeks access, they’ll be able to get it.”
The AHA’s most recent report supports that narrative with national data, noting that many nonprofit hospitals’ contributions extend far beyond the metrics currently captured on IRS forms.
A recent Health Affairs study also argued that current IRS tools may understate nonprofit hospitals’ value, particularly in areas such as behavioral health access, chronic disease prevention and upstream public health interventions.
Mr. Allen emphasized that unlike for-profit systems, where much of the margin is returned to shareholders, nonprofit hospitals reinvest those dollars into the communities they serve.
“It’s a different model,” he said. “Their success often depends on treating illness; ours focuses on preventing it — and that changes how and where we invest.”
Click here to access the latest AHA report.
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