Are Nonprofit Hospitals Betraying their Mission?

Some of the biggest corporations in our cities pay no income taxes. Often, they also pay no property taxes and get other tax breaks. They all receive massive taxpayer-funded subsidies and other benefits. These are supposedly “nonprofit” hospitals, and they get these benefits based on their claim to be charitable institutions. But do they really put patients first?

My organization spent the last few months researching some of the largest tax-exempt hospital systems.

Our new Nonprofit Hospital Accountability Report shows strange priorities, at best. Executives receive massive salaries and lavish perks while laying off frontline staff. Ignoring healthcare deserts nearby, they expand overseas. And while claiming to be charities, many sue patients for medical debt.

At the same time, many smaller medical practices operate as regular businesses.

They actually pay income and property taxes, and often receive few or even no subsidies. This is one reason why local doctors’ offices get bought up and consolidated into giant hospital conglomerates.

Here in the United States, we spend nearly twice what other similar nations spend per person on healthcare. Yet we get similar results. And the big hospitals lobby constantly for more money from taxpayers. That cannot be the answer.

In fact, the answer is more accountability.

Tax-exempt status is not an entitlement. It is a privilege—one that forces other taxpayers to pay more. That, and all the other benefits showered on these giant hospitals, are based on the idea that they make sacrifices for the public good. If they are not making those sacrifices, they should be called out and face consequences, including the loss of their tax exemptions.

Rush University Medical Center in Illinois offers a case study that should concern every taxpayer.

Since 2020, Rush has received nearly $75 million in state funding, plus other significant tax advantages. That support is justified only if it translates into better care for patients and service to its surrounding communities.

In early 2024, Rush laid off employees citing “financial struggles,” even as it continued to provide multimillion-dollar compensation packages to top executives. Its CEO received more than $3.6 million in pay, along with additional benefits like a personal housing allowance and memberships at exclusive social clubs. 

The outlandish spending does not stop there.

This nonprofit had more than $167.8 million in overseas investments and relationships in the same year while simultaneously expanding high-profile partnerships with professional sports franchises like the Chicago White Sox.

At the same time, Rush benefitted from more than $194 million in federal awards through dozens of government programs.

Rush is just one example; another is the New York-Presbyterian Hospital System.

This tax-exempt hospital system was part of a $750 million settlement covering hundreds of sexual abuse claims by female patients who were molested during medical treatments. Simultaneously, it boosted the CEO’s annual compensation from $8.9 million to more than $23 million.

During all this, the hospital also reportedly laid off approximately 1,000 employees due to “financial challenges.” And how much did New York-Presbyterian spend on charity? During the years we examined, the corporation directed only 0.7% to 1% of revenue to charity care. 

Our report identifies a pattern at nonprofit hospitals across the country.

Many of these tax-exempt corporations continue to benefit from public support and government programs while spending little on charity care and operating in ways that look like any other big business. 

Any rampant misuse of taxpayer dollars should concern every public official and all Americans.

Taxpayer-supported benefits are meant to support the public good, not to subsidize massive corporations simply because they run a hospital.

Many nonprofit hospitals provide essential services to vulnerable populations, but our current system relies too much on assumptions and too little on oversight. 

With billions in taxpayer dollars at stake, not to mention our health, Americans should know that public funding is going to patient care and not just funding lavish compensation packages and luxury perks while frontline healthcare workers lose their jobs.

Federal and state officials should take a closer look. Those with oversight responsibilities need to ask whether nonprofit hospital systems like Rush and New York-Presbyterian are fulfilling their charitable missions, appropriately using government benefits, and upholding the public trust that is the basis of their privileged status.

The American people deserve nonprofit hospitals that respect taxpayers and put patients first.

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