WATCH: California experts discuss fair share results

Could nonprofit hospitals be doing more to earn their tax breaks? The Lown Institute’s most recent “Fair Share Spending” analysis found that out of 2,425 private nonprofit hospitals, 80% spent less on community investments than the estimated value of their tax break – what we call a  “fair share deficit.” The total fair share deficit for the U.S. amounted to nearly $26 billion in 2021.

California stands out as a center of policy action around medical debt and hospital accountability, yet many hospitals and systems there appear to be underspending on community health. The Lown Institute brought on California health policy experts Anthony Wright (Health Access California), Joan Allen (SEIU-UHW), and Dr. Michelle Burton (Rising Communities) to discuss the Fair Share Spending results, and how policymakers can help improve transparency and accountability around this issue.



Why does hospital community investment matter?

Most hospitals in the U.S. are private nonprofits, which are generally exempt from federal, state, and local taxes. In exchange, hospitals are expected to invest in their community and fulfill their social mission through initiatives such as giving free care to patients who can’t afford it and creating programs to address priority health needs. 

Spending in these areas is critical, according to Joan Allen, who spoke of the potential of directing community benefit dollars towards medical debt relief, an issue many of the health workers she represents at SEIU-UHW come across in their work with patients.

“We’re seeing our patients showing up later and sicker than they should.. It’s an issue that could have been dealt with earlier, but they were so afraid of the debt, so afraid of the bill, that they held off as long as they could, hoping it would get better…”

Joan Allen, Government Relations Advocate at SEIU-UHW

Just how much are hospitals giving back?

Our analysis revealed that overall, 80% of hospitals had a fair share deficit in 2021. Counting up the deficit of all of these hospitals, there’s a combined amount of nearly $26 billion. Reflecting on these results, Anthony Wright emphasized the importance of data as a source of accountability for hospitals and health systems.

“Doing the math to figure out what is being given and does it meet the expectation that we have for our health system is incredibly important.”

Anthony Wright, Health Access California

This research helps policymakers understand “what more we could ask of our health system to meet the needs that we clearly have in the community,” said Wright.

These results also reveal a major rift in hospital priorities and commitments when it comes to investing in the communities they serve. The key to closing such large gaps boils down to one thing, according to Dr. Michelle Burton.

“You have policies that are incomplete; they have no enforcement mechanisms … We have to come back to community-led, public-private partnerships to start talking about where these deficits are, where these flaws are that are harming communities, so we can mitigate that harm.”

Dr. Michelle Burton, CEO, Rising Communities

Where do we go from here?

The results of this analysis and conversation with the experts revealed the importance of transparency and accountability. A Lown Institute policy brief, released along with the report, shows how some states are already taking the lead on policy solutions.

For example, in states like Massachusetts, hospitals are already required to be more specific and detailed with how they report their community investments, so policymakers and community members can get a better idea of how they’re giving back. And in states like Oregon, hospitals have a minimum spending threshold based on their historic spending and community need, to ensure hospitals are maintaining a certain level of community benefit spending.

In California, Anthony Wright spoke to some legislation coming down the pike surrounding medical debt, including having Los Angeles County buy and forgive medical debt, disallowing hospitals to take liens on patients’ houses, and making sure that medical debt does not incur on people’s credit reports. “I’m excited about putting in place policies that prevent medical debt in the first place,” said Wright.

States have learned that policy solutions must be developed along with all stakeholders, especially hospitals.

“It’s about fostering collaboration. How do we find a solution where the consumer doesn’t have to get punished for being sick and the people who took care of them aren’t punished?”

Dr. Michelle Burton, CEO, Rising Communities

With many hospitals giving back far less than they take, there remains a great need to reimagine what socially responsible hospitals look like and how we can help them get there through increased community benefit spending and regulation.