This week, the House Oversight Subcommittee held a hearing on Where Tax-Exempt Hospitals are Spending Your Tax Dollars. Five witnesses testified representing three universities and two advocacy organizations. Two of the witnesses repeatedly warned of “mission creep” among Not-For-Profit (NFP) hospitals towards social issues such as Diversity, Equity and Inclusion (DEI) and specialized care for LGBTQ+ individuals. The other three witnesses focused primarily on hospital financing and economics. For faith-based and mission-driven systems, the hearing is a reminder of both opportunity and risk. NFP hospitals remain essential providers of care for underserved communities, yet face intensifying scrutiny on their tax-exempt benefits, financial practices and community investments. 

Who were the witnesses? 

Dr. Ge Bai, PhD, CPA, professor of accounting at Johns Hopkins University, is a prominent researcher in NFP hospital financing and reporting and appeared before Congress on the same topic in 2023. Dr Bai’s research focuses on calculating the value of tax savings for NFP hospitals and around the calculation of charity care and Medicaid shortfalls. She is highly critical of NFP hospitals, often advocating for increased price transparency and more detailed reporting of Community Benefit (CB) activities. Much of Dr. Bai’s work has been financed by Arnold Ventures.  

During the hearing, Dr. Bai advocated for “levelling the playing field” between NFP hospitals and for-profit hospitals; she insisted that creating a minimum threshold for CB or charity care wouldn’t be productive as hospitals would “hire consultants to massage the numbers.” Dr. Bai stressed the rising trend of urban hospitals being classified as rural hospitals, the topic of her most recent publication. In her written testimony and opening statements, she also argued that “many nonprofit hospitals generate substantial profits through the federal 340B Drug Pricing Program” and referred to the program as a “buy-low, sell-high program.” 

Another leading academic on NFP hospital financing and law, Dr. Jill R. Horwitz, J.D., PhD, professor of law at the UCLA School of Law and Associate Director of the Center for Law and Economics at UCLA also testified. Dr. Horwitz’s more recent research studies service offerings by hospital ownership type, finding that NFP hospitals are more likely to invest in unprofitable service lines than for-profits. She has also written in support of NFP hospitals and argued that reforms should focus on oversight over hospital board composition to ensure CB investments effectively address identified community health needs.  

These arguments were reiterated throughout Dr Horwitz’s testimony. She disagreed with other witnesses on the assertion that private equity in the private hospital space would lead to lower costs and higher quality in health care, a subject she analyzed following the fall of Steward Health Care.  

Dr. Christopher Whaley, PhD, serves as Associate Director of the Center for Advancing Health Policy through Research and Associate Professor of Health Economics at Brown University. Dr. Whaley has been a frequent witness in congressional hearings; he has also testified five times before various state legislatures, including California, Oregon and Texas. His research focuses primarily on vertical integration in health care and the effects of private equity and hospital price transparency.  

Throughout his testimony this week, Dr. Whaley argued that NFP hospitals’ CB spending is outpaced by their tax breaks by about $25 billion per year. He stressed that quality of services between for-profit and NFP hospitals is indistinguishable, even asking “if community investment is not larger and quality is not superior, then where are the extra dollars from these financial advantages going?” Whaley repeatedly criticized health systems for purchasing stadium naming rights and sponsoring sports teams, an issue that has been covered in the media lately. 

Will Hild, J.D. is Executive Director of Consumers’ Research, an organization focused on combating “woke” business practices such as DEI and ESG. The organization recently published a “Consumer Warning” report on Woke Hospitals: Embracing Political Priorities Ahead of Patient Care, which states:  

“Many nonprofit hospital systems have leveraged taxpayer dollars to advance controversial political and social causes. Instead of lowering costs and passing savings onto patients, hospitals have spent considerable money, time, and manpower pursuing a partisan agenda pertaining to [DEI], radical gender ideology, and climate activism.” 

Throughout his testimony, Mr. Hild criticized NFP hospitals for their efforts to promote DEI and for providing gender affirming care. While his testimony didn’t focus on hospital financial practices, he did urge Congress to require line-item reporting of DEI initiatives and programs in IRS Form 990 filings.  

Dr. Stanley Goldfarb, MD, is the Board Chairman of Do No Harm, a physician-led advocacy group opposing gender-affirming care and DEI efforts in medicine and medical education, also classified as a hate group by the Southern Poverty Law Center. The group developed model legislation to ban the provision of gender-affirming for transgender youth, which has been introduced in several states, including Florida. Throughout his testimony, Dr. Goldfarb criticized NFP hospitals for promoting DEI, referring to DEI education as “indoctrination sessions.” He accused NFP hospitals of using their tax benefits and subsidies to fund “DEI bureaucracies” and “controversial and exclusionary political causes” such as gender-affirming care. 

During the hearing, no policy solutions were seriously considered. The majority of witnesses did caution against setting a minimum threshold for community benefit, claiming NFP hospitals would treat it as a compliance check-box rather than for meaningful investment. Some witnesses advocated for increased transparency in CB investments while others noted this would just increase administrative burden.  

Despite criticism from several members, some noted the work of hospitals in their districts. Rep. Aaron Bean (R-FL) stated, “I know in Florida, we’ve got great hospitals that exceed what they’re expected to do. UF Health, AdventHealth, Moffett Healthcare […] was in my office today, bringing their report card and showing that they’re not on the naughty list.” The subcommittee chair promised future hearings on the topic.  

AHPA will continue to share with policymakers the value of our hospitals’ community investments, advocating for balanced policy solutions that affirm the not-for-profit mission, sustain access to care, and promote financial resilience in an era of unprecedented health system challenges. To view examples of how AHPA health systems are supporting the health of their communities, click here.