In exchange for being exempt from most local, state, and federal taxes, not-for-profit hospitals must provide financial assistance to some patients and spend money to improve the health of the communities they serve. These are called hospitals’ “community benefit” requirements.
Some critics claim that NYC hospitals fall short of their tax-exempt obligations by spending less on their community benefit activities than they save on tax breaks. Greater New York Hospital Association commissioned the nationally renowned firm Ernst & Young (EY) to study the issue.
The above PDF contains the following reports:
- 2023 New York City not-for-profit hospitals’ community benefits analysis
- Benefit of tax exemption of not-for-profit hospitals in New York City for tax year 2023
EY found that NYC hospitals’ community benefit spending exceeds their tax savings by a wide margin. Using the Internal Revenue Service definition of community benefit, EY found that, in 2023:
- NYC hospitals spent $9.5 billion on their communities while receiving nearly $2.2 billion in tax exemptions, a difference of more than $7 billion
- NYC hospitals’ community benefit spending represented 17.5% of their operating expenses, nearly double the national average of 9.27% (these are 2022 statistics)
- In addition to $4.3 billion in community benefit spending attributable to financial assistance to patients and losses from Medicaid and other public health insurance programs, NYC hospitals spent $5.1 billion on benefits such as community health improvement services, health professions education, research, and subsidized health services
Far from not meeting their tax-exempt obligations, New York City hospitals go above and beyond to ensure that their communities receive high-quality care well beyond the bedside.