A majority of nonprofit hospitals in the U.S. do not spend as much as they get in tax breaks on charity care and community investments, according to a new report released Tuesday.
And while they have been battered for a decision to close two unprofitable hospitals in Fulton County last year, two Wellstar Health System hospitals were on the national list of 25 hospitals that spent the most on charity care in comparison to the value of their tax breaks.
According to the report from the Lown Institute, the 2023 Fair Share Spending Report, Wellstar Kennestone Hospital and Wellstar Cobb Hospital, both in Cobb County, spent respectively $41 million and $25 million more on charity and community care than they received in tax breaks.
Lown Institute looked at a total of 1,773 private nonprofit hospitals, using data from each hospital’s 2020 IRS Form 990 filings. Those federal filings include each hospital’s own estimate of the value of the charity care they have provided in their communities.
Lown Institute officials acknowledged Wellstar’s high ranking in the report might be unexpected. Their closure of two Atlanta Medical Center hospitals in Atlanta last year angered local officials. Both hospitals served disproportionately poor communities and Wellstar said both were losing money.
“We’re starting to see policymakers and communities hold hospitals accountable for their social responsibility,” said Dr. Vikas Saini, president of the Lown Institute, said during a webinar Tuesday about the report. “For example, state and local officials in Atlanta and the Georgia NAACP recently filed a federal complaint against Wellstar Health System for closing two hospitals known for serving the Black community while planning to open a new hospital in a whiter and wealthier area.”
Seven of Wellstar’s nine locations were listed in the report as having a “fair share surplus” meaning they spent more on charity than they received in tax breaks in 2020.
The report measures community investment from nonprofit hospitals nationwide by subtracting a hospital’s spending on charity care and community investment from the estimated value of its tax exemptions. Out of the hospitals included in the report, 77%, or roughly 1,360, spent less on caring for the poor than they received in tax breaks.
Hospitals where 5.9% of overall spending was used for charity care and community investment were deemed to have met their fair share. The Lown Institute is a nonpartisan think tank located in Needham, Massachusetts that focuses on equity in the U.S. health care system.
In exchange for being exempt from most federal, state and local taxes, nonprofit hospitals are expected to care for low-income patients at little to no cost, and tend to the community’s health needs.
“Americans desperately need hospitals to use their billions in tax breaks as intended: to promote health while relieving the problems of medical debt and access to care,” said Saini in a press release. “These are charitable organizations and they should do a better job at prioritizing social responsibility over profitability.”
Overall, 32 out of the 66 Georgia hospitals included in the report showed a deficit in community spending. Among the lowest on the list were several Emory hospitals, Northside Atlanta Hospital and Piedmont Atlanta, with fair share deficits ranging from $18.6 million to $43 million in 2020.
In Atlanta, Grady Memorial Hospital and Atlanta Medical Center’s downtown location have historically served as the cities hospitals for charity care. AMC, formerly known as Georgia Baptist Hospital, held with the commonality of nonprofit hospitals being connected to a particular religious denomination.
Grady was not included in this year’s report because their 2020 IRS From 990 filing is not available, something the Lown Institute attributed to IRS delays and understaffing.
“As the top provider of charity care in the state and one of the top 10 providers nationwide, Wellstar is committed to bringing expert, compassionate health services to those who need them,” Wellstar officials said in a statement given to The Atlanta Journal-Constitution. In 2022, Wellstar said its uncompensated and charity care exceeded $1.2 billion.
In the year ending June 30, 2022, Wellstar reported an operating loss of $114 million for its two AMC locations, which were closed in October 2022. However, according to tax filings, Wellstar netted more than $160 million in income in 2019 and 2020, which some critics have said could and should have been used to cover losses at both AMC locations.
“There’s a lot of money, it’s just not perhaps distributed in a way that optimizes everybody’s health,” said Saini when asked by the AJC about Wellstar being included on the list of 25 hospitals with the largest fair share surpluses, but having also closed AMC and AMC South.
In Georgia the total fair share deficit of nonprofit hospitals is $282 million, which the Lown Institute estimates is enough to erase the medical debt for 126,000 people in state.
“Nonprofit hospitals are going to need help changing their behavior,” Saini said. “These hospitals are supposed to be accountable to Americans through federal, state, and local authorities — but oversight has been negligible.”
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25 Hospitals with the Largest Fair Share Surpluses
These 25 hospitals spent the most on caring for the poor in comparison to their estimated tax breaks. There are ties, as some hospitals spent the same amounts.
1. New York-Presbyterian Hospital (New York City): $117 million
2. Nebraska Medical Center (Omaha, Neb.): $116 million
3. Stanford Health Care (Palo Alto, Calif.): $92 million
4. Mount Sinai Hospital (Chicago): $54 million
5. Christus Spohn Hospital Corpus Christi (Corpus, Christi, Texas): $47 million
6. UPMC Western Maryland (Cumberland, Md.): $44 million
7. Gerald Champion Regional Medical Center (Alamogordo, N.M.): $42 million
8. Saint Francis Hospital (Tulsa, Okla.): $41 million
8. Wellstar Kennestone Hospital (Marietta, Ga.): $41 million
10. Summit Healthcare Regional Medical Center (Show Low, Ariz.): $40 million
10. United Regional Health Care System (Wichita Falls, Texas): $40 million
12. Martin Luther King Jr. Community Hospital (Los Angeles): $39 million
13. UCHealth Medical Center of the Rockies (Loveland, Colo.): $38 million
14. Tidal Health Peninsula Regional Medical Center (Salisbury, Md.): $35 million
15. Baptist Memorial Hospital (Memphis, Tenn.): $31 million
16. St. Joseph Regional Medical Center (Bryan, Texas): $30 million
17. Meritus Medical Center (Hagerstown, Md.): $29 million
18. University of Maryland Shore Medical Center at Easton (Easton, Md.): $25 million
18. Regional West Medical Center (Scottsbluff, Neb.): $25 million
18. Wellstar Cobb Hospital (Austell, Ga.): $25 million
18. Kuakini Medical Center (Honolulu): $25 million
22. Boston Medical Center (Boston): $24 million
22. Rochester (Rochester, N.Y.) General Hospital: $24 million
24. St. John’s Episcopal Hospital at South Shore (Far Rockaway, N.Y.): $23 million
24. Houston Methodist Sugar Land (Sugarland, Texas) Hospital: $23 million
Source: The Lown Institute
Hospitals with the Largest Fair Share Surpluses in Georgia
These hospitals in Georgia spent the most on caring for the poor in comparison to their estimated tax breaks.
1. Wellstar Kennestone Hospital: $41 million
2. Wellstar Cobb Hospital: $25 million
3. Archbold Memorial Hospital: $16 million
4. Upson Regional Medical Center: $13 million
5. NGMC Gainesville: $13 million
Source: The Lown Institute
Hospitals with the Largest Fair Share Deficits in Georgia
These hospitals in Georgia spent the least on caring for the poor in comparison to their estimated tax breaks.
1. Emory University Hospital: -$43 million
2. Emory University Hospital Midtown: -$42 million
3. Piedmont Atlanta: -$33 million
4. Emory Saint Joseph’s Hospital: -$28 million
5. Emory Decatur Hospital: -$19 million
Source: The Lown Institute
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