About this Guide
Criticism of nonprofit health systems and questions about the value of their contributions to communities have been ongoing narratives in media and policy discussions. The recent report by the Committee for a Responsible Federal Budget (CRFB), a nonprofit and nonpartisan organization, critiques the tax benefits granted to nonprofit hospitals, alleging insufficient delivery of community benefits (Federal Tax Benefits for Nonprofit Hospitals, 6/12/24).
While this article presents a concerning narrative, we do not recommend any direct response to refute these claims in media at this time. Currently, this article has not garnered media attention, and drawing attention would be counterproductive.
At the same time, knowing that members may encounter these messages in the course of ongoing communications with stakeholders, we have compiled this guide to arm organizations with the broader context to dispel misinformation and correct the record.
Overview and claims from the report
“The Federal Tax Benefits for Nonprofit Hospitals”
A report from the Committee for a Responsible Federal Budget (CRFB)
Background The recent report titled "The Federal Tax Benefits for Nonprofit Hospitals" (June 12, 2024) by the Committee for a Responsible Federal Budget (CRFB), a nonprofit and nonpartisan organization, raises several criticisms of nonprofit hospitals, suggesting they are not fulfilling their community benefit obligations adequately and questioning the justification for their tax-exempt status. (Note: This report is part of a larger initiative, which is a partnership with Arnold Ventures and West Health.)
Key Claims from the Report
Insufficient community benefits: Nonprofit hospitals are failing to meet community benefit obligations under all but the broadest definitions. Evidence suggests nonprofit hospitals offer fewer community benefits compared to for-profit hospitals.
Inadequate charity care: Nonprofit hospitals provide charity care at lower levels compared to the value of their tax exemptions. Media investigations report aggressive collection practices and insufficient screening for charity care eligibility.
Broad and ambiguous definition of community benefits: The IRS's definition of community benefits is overly broad, leading to inconsistencies and challenges in assessing hospital performance.
Financial prioritization over community welfare: Investigative reports highlight instances where nonprofit hospitals prioritize financial gains over community welfare, often neglecting those in need of financial assistance.