Would it surprise you to learn that the Cleveland Clinic, which is a 501(c)(3), tax-exempt, nonprofit charitable organization, made more than $1 billion in profits in 2024?
It was $1,078,933,223 to be exact, and the “nonprofit’s” profits were $827 million in 2023, $1.3 billion in 2020, and $2.1 billion in 2021.
This isn’t just an Ohio problem. Many of the largest so-called nonprofit hospital systems in America are enjoying the best of both worlds. They collect generous tax exemptions worth roughly $37 billion a year, courtesy of the American taxpayer, while behaving in ways that would make Wall Street portfolio managers blush. That arrangement is finally starting to attract the scrutiny it deserves in Congress, and not a moment too soon.
On July 1, the U.S. House Ways and Means Committee, under the leadership of Chairman Jason Smith of Missouri, advanced H.R. 9504, the Tax-Exempt Hospital Transparency Act. Introduced by Republican Rep. Greg Murphy (NC-3), himself a practicing physician, the bill cleared committee on a 25-15 vote. The commonsense bill would require tax-exempt hospitals to disclose more information on their IRS Form 990 filings, apply tougher reporting standards to the biggest players, and instruct the Government Accountability Office to examine what the 25 largest tax-exempt hospital organizations would actually owe in taxes if they were treated like the for-profit businesses many of them resemble.
This is not a radical proposal. No hospital would lose its tax-exempt status under H.R. 9504. As U.S. Republican Rep. Lloyd Smucker (PA-11) rightly pointed out during the markup, the measure simply asks hospitals to demonstrate that they are earning the enormous public subsidies they receive. If a given hospital is truly providing charity care to the vulnerable patients Congress had in mind when it wrote the tax code, it should have no trouble putting that record on paper.
The problem is that many of these institutions have drifted far from their charitable mission. Some of the country's largest tax-exempt hospital chains look less like community caregivers and more like hedge funds with a stethoscope in the lobby. They pour hundreds of millions of dollars into equity investments, they buy naming rights for sports arenas, they dabble in political advocacy, and they pay their executives sums that would raise eyebrows at any Fortune 500 company.
In testimony before Ways and Means in April, Wright Lassiter III, President and CEO of CommonSpirit Health, the largest nonprofit hospital system in America, admitted that his organization held $718 million in publicly traded securities and paid him $14 million in compensation last year. That is not charity; that is a tax scam. Since the American taxpayer bankrolls the lion's share of hospital revenue in this country through Medicare, Medicaid and preferential tax treatment, the least these institutions can do is open the books.
Last month, Texas state Rep. Tom Oliverson, a physician himself, wrote in The Washington Times that too many nonprofit hospitals collect their tax breaks while behaving like for-profit corporations. They stockpile reserves, charge sky-high prices, and hound patients over small medical debts, many of whom qualify for charity care. As Rep. Oliverson observed, if taxpayers are footing the bill for a hospital's nonprofit status, they have every right to expect genuine charity, honest stewardship, and real community benefit in return.
Dr. Oliverson is exactly right, and transparency alone will not fix the problem. The steady wave of hospital consolidation across the country is driving prices higher, squeezing out independent providers, and leaving patients with fewer choices and bigger bills. That kind of market power, propped up by a tax subsidy, is precisely the sort of waste, fraud, and abuse that conservatives have long warned about. It is the taxpayer who pays twice, once at the register through inflated hospital charges and again on April 15 to cover the exemption.
Republicans in Congress need to know that voters heading into the midterms are not going to reward a party that shrugs at $37 billion in annual tax benefits flowing to institutions that will not even say how much free care they provide. That’s why they should pass H.R. 9504. Follow it with serious reforms that address consolidation, executive pay excesses and predatory billing practices, and keep reminding the American people who is on their side in this fight.
Ken Blackwell, a former U.S. Ambassador to the United Nations Human Rights Commission, State Treasurer of Ohio, is an adviser to the Family Research Council in Washington, DC.
Editor’s Note: Do you enjoy Townhall’s conservative reporting that takes on the radical Left and woke media? Support our work so that we can continue to bring you the truth.
Join Townhall VIP and use promo code FIGHT to receive 60% off your membership.
Join the conversation as a VIP Member