RALEIGH, N.C. (WNCN) — Are North Carolina’s nonprofit hospitals giving enough back to the community to justify their tax breaks?
A new study suggests many across the country are not, and it prompted the state treasurer to publicly question the executives at those in North Carolina.
And CBS 17 found one local hospital that received credit for doing a good job insists it doesn’t deserve that praise — because it is, in fact, a for-profit facility.
The Lown Institute looked at nearly 1,800 nonprofit hospitals across the country and found 77 percent of them spent less on charity care and community investment than what it estimates is what their tax breaks are worth.
The organization calls that a hospital’s “fair-share deficit” and estimates it at more than $14 billion.
“Our conclusion was that really, all over the country, the vast majority of nonprofit hospitals are really not meeting their fair share obligations,” said Dr. Vikas Saini, a cardiologist and president of the institute.
Those numbers are based on IRS Form 990s for 2020 that nonprofits are required to file, and the only hospitals evaluated were those whose forms are publicly available.
In North Carolina, the combined fair-share deficit of $392 million ranks 13th nationally, the report says.
State Treasurer Dale Folwell took to Twitter and said North Carolina’s nonprofit hospital executives “have lost their mission” and accuse those hospitals of putting “profits over impoverished patients.”
Folwell's office released a similar report two years ago that focused on the charity care provided by those hospitals in North Carolina.
While the new report does not single out any of the state’s 37 hospitals it says has a deficit, it does praise 17 others for spending more on financial assistance and community investment than the estimated value of their tax exemption.
Two WakeMed facilities had a combined surplus of about $25 million, the report found. The $19.8 million surplus at WakeMed Raleigh was the highest in the state while WakeMed Cary had one totaling $5.6 million.
Other hospitals in the central part of the state that earned credit from Lown included Siler City-based Chatham Hospital, which had an $889,000 surplus. President Jeff Strickler called his facility’s mention “a little bit of a pleasant surprise” because he wasn’t familiar with the organization.
“I think it does acknowledge what we’ve been saying for some time, which is … UNC Chatham provides a great value and a point of access to all the residents of Chatham County and also acknowledges a lot of the work we’ve done in a number of areas,” Strickler said.
“But I do think there’s some particular advantages that Chatham Hospital may have had, particularly at that point in time with the way the methodology is, which enabled us to sort of be reflected in our overall rating,” he added.
And then there’s Person Memorial Hospital in Roxboro.
Lown gave it credit for $24,000 in fair-share spending that year.
Spokeswoman Liz Harris said in a statement that Person Memorial is “very flattered” to be included — but added that it’s not tax-exempt and actually paid $1.7 million in taxes during the year.
The disclaimer on the Lown website says it only ranked private nonprofit hospitals with available IRS tax filings from 2020.
Saini says his team is investigating exactly how the Roxboro hospital made it onto the list but added that “there’s no doubt that it’s really hard pinning this stuff down.”
Harris also pointed to a statement from the American Hospital Association that says the report is “wrong and cannot be taken seriously,” criticizes the report for cherry-picking data and calls the fair-share threshold “invented.”
“We welcome a discussion about the many benefits hospitals provide to their communities, but relying on obvious bias, fuzzy math and dubious conjecture undermines efforts to improve access to high-quality care for all Americans,” the blog post concluded.
Saini objects to the AHA’s assertion that its methods were wrong.
“We would welcome a public dialogue about what should and shouldn’t be counted,” he said, “but it should include the community and should not be a debate by press release.”
