Consider nonprofit hospitals’ executive compensation practices. In 2017, the average annual compensation for a CEO at one of the 82 largest nonprofit hospitals in the U.S. was about $3.5 million. While the validity of executive compensation may be difficult to dispute, it’s clear that, for many of these organizations, little of the public money they receive is transferred to those who need it most.
Nonprofit hospitals’ combined tax exemptions were approximately $28 billion in 2020. But that same year, these hospitals spent about $16 billion on free or reduced-price charity care for low-income patients — or about 57% of the tax benefits they received.
The Internal Revenue Service considers this so-called “charity care” to be a major justification for these hospitals’ tax exemptions. But a 2018 study by the National Bureau of Economic Research found that charity care accounted for only 1.5% of the median nonprofit hospital’s expenses, while the median for-profit, taxpaying hospital spent 1.4% of its expenses on charity care.
https://www.hrw.org/news/2023/07/11/nonprofit-hospital-or-commercial-juggernaut