Do Nonprofit Hospitals Earn Their Tax Exemptions?

Analysis of the feckless nonprofit tax exemptions and other polite health care provider scams by Devorah Goldman at City Journal:

https://www.city-journal.org/article/nonprofit-tax-exempt-hospitals-medical-care

Nonprofit Hospitals in the Crosshairs
Democrats and Republicans could join forces to rein in some health systems’ abuse of their tax-exempt status.
Devorah Goldman - October 16 2025

Last month, the U.S. House Ways and Means Committee held an oversight hearing with the colorful title “Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals are Spending Your Tax Dollars.” The witnesses included Stanley Goldfarb of Do No Harm, who noted that billions of dollars in tax subsidies are spent on “DEI pledges, training mandates, and equity bureaucracies” at charity hospitals or academic medical centers across the country.

Nonprofit health systems have traditionally been celebrated on the left and criticized on the right. To the former, they held out the promise of free or low-cost care for the needy, while supporting a range of Democratic causes through legislative advocacy. Many conservatives, meantime, saw tax-exempt medical institutions as bloated, expensive, impersonal, government-subsidized threats to the small doctor’s office and the tailored care that comes with it.

Today, however, the concerns are bipartisan. Even avowed socialists like Vermont Senator Bernie Sanders and New York mayoral candidate Zohran Mamdani are criticizing nonprofit hospitals for reaping huge tax-free profits while ignoring their pledges to provide low-cost medical care.

As Mamdani pointed out in Jacobin, the CEO of NYU Langone took home roughly $23 million in 2023. The nonprofit hospital nets many millions in profit on its billions in revenue, and it charges more than twice as much as other nearby hospitals for routine procedures like C-sections. Mamdani’s article criticized NYU Langone for abandoning its stated mission of caring for the poor and failing to justify its cost to taxpayers.

Many conservatives agree. Peter Pitts, the president and co-founder of the Center for Medicine in the Public Interest and a former associate commissioner of the FDA, recently published a report examining ways in which nonprofit hospitals drive unsustainable health-care costs. Pitts notes that the savings from their across-the-board exemptions from federal, state, and local taxes far exceed the costs of the charity care they provide.

In New York alone, the “fair share deficit” for nonprofit hospitals—the amount by which their tax savings outstrip their charity expenditures—exceeded $1 billion in 2018. In 2023, NYU Langone netted well over $1.3 billion in profits before factoring in tax savings. New York Presbyterian Hospital netted nearly $500 million. The list goes on.

These hospitals receive hundreds of millions in tax-deductible charitable donations each year. Donors gave $435 million to Memorial Sloan Kettering Cancer Center, NYU Langone, and Montefiore Medical Center in 2020.

Even with all this largesse, nonprofit hospitals frequently invest in advertising to attract privately insured patients. NYU Langone spent over $34 million on advertising in 2019. Nonprofit hospitals point to increased costs to justify high prices for services, but their publicly available tax returns reveal soaring profit margins and CEO pay. Many nonprofit hospitals also invest in real estate holdings beyond traditional hospital facilities as a means of generating additional income.

Nonprofit hospitals also frequently pursue aggressive debt collection, including wage garnishments and lawsuits against patients, noted Pitts. And they often refuse to comply with federal requirements to inform patients about the prices of their services in advance.

Republicans on Capitol Hill have begun focusing on these issues. In addition to the hearing noted above, in August 2025 the House Ways and Means Committee publicized a Health Affairs study that found a large number of nonprofit urban hospitals “are exploiting a Medicare definition that allows them to be considered both ‘urban’ and ‘rural’ simultaneously, letting them draw down generous benefits and reimbursement models specifically intended for rural communities.”

“Hundreds of sophisticated urban hospitals have gamed Medicare’s wage index to get the financial benefits of being urban facilities, while, at the same time, posing as ‘rural’ to receive the significant benefits Congress intended for truly rural hospitals,” says the report.

Reining in nonprofit hospitals’ abuse of their status presents a genuine opportunity for Democrats and Republicans to join forces. To be sure, they have different reasons for doing so—progressives, to facilitate more government spending; conservatives, to ease the burden on taxpayers. But both are in broad agreement that nonprofit hospitals should not be permitted to abuse their tax-exempt status to enrich their executives, engage in real-estate speculation, and extort people seeking affordable care—all while raking in millions in donations.

All excellent questions!

I'd love to see all nonprofit hospitals' tax-exemption made subject to local referendum. Every 1-3 years should be adequate to distract the C-suite from chasing federal and insurance funds, at least long enough to campaign for local support.