Insight
August 5, 2021

The 41 hospitals costing communities $4 billion

Which hospitals received at least $50 million more in tax breaks than they spent on community investment?

By Judith Garber

Key Takeaways

  • In a Lown Institute analysis, 72 percent of hospitals were found to have a "fair share deficit," meaning they spent less on charity care and community investment than they received in tax breaks.
  • The majority of hospitals that didn’t spend their fair share had a deficit of $7 million or less, but there are 41 hospitals with deficits of $50 million or more.
  • Among the hospitals with fair share deficits of $50 million or more, many are well-known academic medical centers, and most are in states that expanded Medicaid.

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. 

Read more about our fair share deficit metric.