Which hospitals received at least $50 million more in tax breaks than they spent on community investment?
By Judith Garber
The Lown Institute Hospitals Index is the first to calculate “fair share spending” for private nonprofit hospitals – the difference between what they receive in tax breaks and what they give back to communities. We added the amounts that hospitals spend on charity care and other investments that have direct benefit to the community–like health clinics, housing, and food security.
Hospitals that gave at least 5.9 percent of overall expenditures to charity care and meaningful community investment were considered to have spent their fair share, while hospitals that did not spend enough had a “fair share deficit.”
Overall, most private nonprofit hospitals spent less on their communities than the value of their tax exemption, collectively creating a $17 billion shortfall. However, the total fair share deficit was not distributed evenly across hospitals.
The majority of hospitals that didn’t spend their fair share had a deficit of $7 million or less, and 90 percent of hospitals had a deficit of $23 million or less. The top 10 percent of hospitals with the largest deficit (171 hospitals) together accounted for $8.3 billion -- nearly half of the total deficit.
Table 1: Distribution of fair share deficits
| Typical fair share deficit | Cumulative fair share deficit | Proportion of total $17 billion deficit | |
| Hospitals in the 25th percentile | $1.5 million | $319 million | 2% |
| 50th percentile | $4 million | $1.5 billion | 9% |
| 75th percentile | $11 million | $4.5 billion | 27% |
| 90th percentile | $23 million | $8.7 billion | 51% |
Clearly, the outlier hospitals with the largest deficits are having an enormous impact, and deserve more attention. Below, we have the 41 hospitals with fair share deficits of $50 million or more, that cumulatively account for about $4 billion in unspent community investment.
Table 2: Hospitals with fair share deficit of $50 million or greater
| Name | City | State | Community benefit spending, % of total expenses | Fair share deficit (millions) |
| CLEVELAND CLINIC | CLEVELAND | OH | 1.4% | -$261 |
| NEW YORK-PRESBYTERIAN HOSPITAL | NEW YORK | NY | 1.9% | -$237 |
| UCSF MEDICAL CENTER | SAN FRANCISCO | CA | 0.9% | -$208 |
| MASSACHUSETTS GENERAL HOSPITAL | BOSTON | MA | 1.2% | -$179 |
| UNIVERSITY OF MICHIGAN HEALTH SYSTEM | ANN ARBOR | MI | 1.1% | -$169 |
| NEW YORK UNIVERSITY LANGONE MEDICAL CENTER | NEW YORK | NY | 2.5% | -$163 |
| VANDERBILT UNIVERSITY MEDICAL CENTER | NASHVILLE | TN | 2.3% | -$157 |
| BRIGHAM AND WOMEN'S HOSPITAL | BOSTON | MA | 1.0% | -$142 |
| HOSPITAL OF UNIV OF PENNSYLVANIA | PHILADELPHIA | PA | 0.5% | -$142 |
| CEDARS-SINAI MEDICAL CENTER | LOS ANGELES | CA | 1.6% | -$138 |
| UNIVERSITY OF CALIFORNIA DAVIS MEDICAL CENTER | SACRAMENTO | CA | 0.3% | -$132 |
| INDIANA UNIVERSITY HEALTH | INDIANAPOLIS | IN | 2.2% | -$128 |
| STANFORD HEALTH CARE | STANFORD | CA | 2.8% | -$117 |
| SPECTRUM HEALTH | GRAND RAPIDS | MI | 1.3% | -$99 |
| HENRY FORD HOSPITAL | DETROIT | MI | 1.6% | -$90 |
| UNIVERSITY OF WI HOSPITALS & CLINICS AUTHORITY | MADISON | WI | 1.2% | -$90 |
| UNIVERSITY OF MARYLAND MEDICAL CENTER | BALTIMORE | MD | 1.3% | -$85 |
| CHRISTIANA HOSPITAL | NEWARK | DE | 1.6% | -$82 |
| FROEDTERT MEMORIAL LUTHERAN HOSPITAL | MILWAUKEE | WI | 1.3% | -$79 |
| UMASS MEMORIAL MEDICAL CENTER/UNIVERSITY CAMPUS | WORCESTER | MA | 1.4% | -$76 |
| LEHIGH VALLEY HOSPITAL | ALLENTOWN | PA | 2.2% | -$74 |
| MILTON S HERSHEY MEDICAL CENTER | HERSHEY | PA | 0.7% | -$74 |
| NORTON HOSPITALS, INC | LOUISVILLE | KY | 1.8% | -$73 |
| UNIVERSITY OF MINNESOTA MEDICAL CENTER, FAIRVIEW | MINNEAPOLIS | MN | 1.5% | -$73 |
| JOHNS HOPKINS HOSPITAL, THE | BALTIMORE | MD | 3.0% | -$71 |
| NORTHWESTERN MEMORIAL HOSPITAL | CHICAGO | IL | 2.3% | -$68 |
| ABBOTT NORTHWESTERN HOSPITAL | MINNEAPOLIS | MN | 1.2% | -$62 |
| LOMA LINDA UNIVERSITY MEDICAL CENTER | LOMA LINDA | CA | 1.1% | -$62 |
| UNIVERSITY HOSPITALS OF CLEVELAND | CLEVELAND | OH | 2.5% | -$59 |
| WEST VIRGINIA UNIVERSITY HOSPITALS | MORGANTOWN | WV | 0.9% | -$59 |
| MARY HITCHCOCK MEMORIAL HOSPITAL | LEBANON | NH | 1.4% | -$59 |
| MORRISTOWN MEDICAL CENTER | MORRISTOWN | NJ | 1.7% | -$59 |
| UNIV. OF VERMONT - FLETCHER ALLEN HEALTH CARE | BURLINGTON | VT | 1.5% | -$58 |
| AURORA ST LUKES MEDICAL CENTER | MILWAUKEE | WI | 1.9% | -$57 |
| VIRGINIA MASON MEDICAL CENTER | SEATTLE | WA | 0.9% | -$56 |
| BAYSTATE MEDICAL CENTER | SPRINGFIELD | MA | 1.4% | -$54 |
| RHODE ISLAND HOSPITAL | PROVIDENCE | RI | 2.0% | -$54 |
| SWEDISH MEDICAL CENTER | SEATTLE | WA | 2.3% | -$54 |
| COMMUNITY REGIONAL MEDICAL CENTER | FRESNO | CA | 1.5% | -$52 |
| AVERA MCKENNAN HOSPITAL & UNIVERSITY HEALTH CENTER | SIOUX FALLS | SD | 1.8% | -$50 |
| LAHEY HOSPITAL & MEDICAL CENTER, BURLINGTON | BURLINGTON | MA | 0.6% | -$50 |
What do these hospitals have in common? Many of them are large teaching hospitals with big names; almost all of the US News Honor Roll hospitals are on this list. The bigger the hospital, the greater the value of their tax exemption.
Most of these hospitals are also in states that expanded Medicaid. Previous research has shown that charity care spending declined at hospitals in expansion states, probably because of the reduced need for free or discounted care for uninsured patients. However, hospitals in expansion states could have reallocated the funds they weren’t spending on charity care to improving the health of their communities. It doesn’t appear that hospitals are doing this-- especially not those running a fair share deficit.
It’s also worth noting that about half of the hospitals on the list had lower Medicaid revenue compared to the national average, despite most of them being in Medicaid expansion states. This means that along with not spending their fair share on charity care and community investment, they also did not serve a large proportion of Medicaid patients. Hospitals with low Medicaid revenues are likely serving more patients covered under private insurance--which pays hospitals more than public insurance-- but they’re not investing that additional revenue back into their communities.