▶ 0:09:38Oh my god.
▶ 0:10:42right, let's get the subcommittee going. Um, for um, brevity, I'm going to take my opening statement just submitted to the Um look for many of us we see 17% of the US economy is now in the taxexempt space for that we're supposed to actually see what is the value of the community good help us understand the value of the community good and how we're doing it well um miss
▶ 0:11:14thank you so much Mr. Chairman, I want to thank our witnesses for being here today. You know, our nation's nonprofit hospitals are the cornerstone of our health system, providing vital care to millions of Americans. These hospitals deliver unmatched benefits to our communities, keeping Americans healthy, bearing the brunt of care to those in need, and serving as a major employer in many of the areas in which they reside.
▶ 0:11:40Collectively, they deliver more in community benefit and charity care to their communities than the foregone revenue from their federal tax exemption. Yet, nonprofit hospitals and our health systems are under attack. They are holding uh I I believe that this hearing today is a little more of a distraction than it is about the actual subject. Unemployment is on the rise.
▶ 0:12:06Costs at the grocery store are surging and health care premiums are set to skyrocket. All thanks to this administration. In the big ugly bill, Republicans made a deliberate choice to strip away more than 15 million Americans of their health care and hit countless more with increased costs and red tape while giving billions to billionaires.
▶ 0:12:27Their refusal to extend the enhanced tax credits that help so many working Americans uh purchase their health coverage means another 4.2 million will become uninsured and tens of millions will see their their their largest premium hike in 15 years. Uh, Republicans enacted a $ 1.5 trillion dollars in health care cuts which are falling at the expense of our hospitals, providers, and patients.
▶ 0:12:55All to pay for tax cuts for billionaires. In Alabama, 375,000 people purchasing their own health insurance receive tax credits to help afford coverage. If billionaires could get tax cuts, then why not working Americans? If Republicans continue to refuse to extend these tax credits, a h 100,000 more Alamians will lose their health care.
▶ 0:13:18A 60-year-old couple in my district earning just over $80,000 will see their cost skyrocket more than 300% by about $20,000. That would have uh that would have to they would have to spend 32% of their income on health insurance alone. Republicans have dramatically cut our health system and they are trying to hide from their record and distract the American public.
▶ 0:13:44Nonprofit hospitals have a long history of operating at a low financial margin. In fact, the ordinary nonprofit hospital typically operates at a negative operating margin in most years. They also are more likely than for-profit or government hospitals to offer every type of medical service. and nonprofit hospitals are considerably more likely to provide poorly reimbursed and thus unprofitable services. These services are disproportionately needed by patients who are uninsured or underinsured.
▶ 0:14:15The bottom line is that without nonprofit hospitals, we will continue to see increased rates of chronic diseases, decreased access to emergency care, and an increase in premature deaths. With the current attack on hospital stability through Medicaid cuts and our failure of this committee to protect access to care, we must protect our hospitals to ensure access to care and the improvement in the quality of life for all of our constituents. I'm looking forward to today's hearing, Mr.
▶ 0:14:42Chairman, and look forward to our test the testimony of our witnesses and I really hope that we all can come to a consensus that supporting our health system instead of attacking it is what we should be doing. I yield back the balance of my time. Now, introduction of our witnesses. Um, William Hyde um is executive director of consumer research. It doesn't actually say for who. Um, Dr. Stanley got okay. Stanley got chairman of the board of do no harm.
▶ 0:15:13Um, Dr. G. Um by is professor of health policy and manager at J manager at John Hopkins Bloomberg School of Public Health. Um Christopher Wallally is associate director of the center of advancing health policy through research at Brown University. Um Dr.
▶ 0:15:33Jill Herurwitz is a is a Tolman family innovation professor at Northwest Northwestern University, Pritsker School of Law and a professor of emergency medicine at Fineberg um School of Medicine. Um William, you're up first.
▶ 0:16:00Excuse me. Chairman Schwikert, Ranking Member Soul, members of the subcommittee. Good afternoon. My name is William Hild and I'm the executive director of Consumers Research. Our mission at Consumers Research is simple, to increase knowledge and understanding of issues impacting consumers and to ensure their freedom to act on that knowledge. So, I appreciate the opportunity to testify today as part of our continued public education campaign.
▶ 0:16:22This year, we expanded our consumer education initiatives to include nonprofit health systems nationwide that leverage numerous funding streams from the federal government and benefits from tax exempt status to advance controversial political and social causes rather than serve their communities. And often the advancement of political agendas such as DEI, gender ideology, and climate activism is easier to find on their public-f facing web pages and materials than actual prices for their services.
▶ 0:16:50As part of our efforts to educate consumers, we issued a consumer warning detailing how several large taxexempt health systems have devoted critical resources to infuse everyday operations with progressive ideological goals. These initiatives include instituting large-scale DEI bureaucracies, promoting gender ideology to children, and supporting environmental activism. At the same time, hospitals are pushing political agendas.
▶ 0:17:17Many fail to comply with healthcare price transparency rules and proportional growth in charity care. This misprioritization of politics over patients distracts hospitals from their core mission and can compromise the quality of treatment and increased costs which can put consumers in serious physical and financial danger. Let me put this in perspective. Under section 501c3 of the Affordable Care Acts added 501R obligations. Charitable hospitals are supposed to operate for public, not private interests.
▶ 0:17:47The community benefit standard was intended to ensure that in exchange for tax privileges, hospitals would provide measurable benefits, affordable care, financial help, and improved services. Nowhere in federal law are discriminatory programs, the mutilation of minors, or investment in green boondoggles required.
▶ 0:18:07Through our research into hospital programs, public-f facing materials, and leadership statements, we documented cases where major nonprofit health systems such as Cleveland Clinic, Vanderbilt University Medical Center, Henry Ford Health, Memorial Herman Health Systems, and others funneled resources into DEI, promoted environmental activism, and performed gender mutilation procedures on children. The deliberate choice these health systems are making to prioritize political activism are concerning and costly.
▶ 0:18:35They require staff, program budgets, marketing, and other resources. Every dollar placed into a DEI policy is a dollar not placed into price transparency. Every dollar used for gender ideology is a dollar taken from charity care. Every dollar put towards environmental activism takes money away from staffing or capacity expansion. Are hospitals counting these programs as meeting the community benefit? Without clear and verifiable reporting, neither Congress nor its taxpayers can answer that question.
▶ 0:19:03Tax exempt status and access to federal funding, grants, and savings programs are public privileges. Congress has broad authority to condition the those privileges on transparency and patient benefit without dictating medical judgment. Improving outcomes for patients is a worthy goal, and many hospitals do important work in this area. The oversight problem comes when community benefit is used as a vague justification for engaging in partisan political activity.
▶ 0:19:31Congress could require line item disclosure and outcome measures for any equity spending that is claimed as community benefit. Initiatives should focus on quality of care and patient outcomes and hospitals should show the data. Hospitals are civic institutions that hold public trust. Nonprofit hospitals receive generous privileges because Congress expects them to deliver measurable community benefits. When systems elevate discriminatory policy uh discriminatory policies, activist climate campaigns, or allow gender mutilation of children, this trust fails.
▶ 0:20:00Congress can restore this trust through more precise definitions, verifiable reporting, and alignment of privileges with the value patients receive. Thank you for the opportunity to testify. I welcome questions. Chairman Schwikert, Ranking Member Su, and members of the committee, thank you for the opportunity to testify today. My name is Dr.
▶ 0:20:24Stanley Golarb, and I serve as the chairman of Do No Harm, an organization of over 35,000 medical professionals and concerned citizens devoted to defending the timeless standards of medical excellence and keeping divisive identity politics out of the practice of medicine. Nonprofit hospitals enjoy extraordinary privileges under federal law, most notably their taxexempt status.
▶ 0:20:48This taxpayer subsidy worth billions of dollars each year is designed to enable hospitals to provide care to the underserved in their communities. But instead of focusing only on curing disease, expanding access to care, and saving lives, too many are also focused on controversial and counterproductive political causes such as diversity, equity, and inclusion or DEI and radical gender ideology that includes dangerous interventions on These practices are misguided.
▶ 0:21:19The problem is clear. We are witnessing hospitals that should be committed only to serving the sick diverting their attention to political activism. They are spending millions on DEI bureaucracies and radical ideology interventions when these resources could be put to far better use. They are spending valuable time and organizational resources on these issues. This is a profound betrayal of the public mission.
▶ 0:21:45It is also at odds with the national priorities recently established through a series of executive orders issued earlier this year. Yet many nonprofit hospitals have been and continue to act in direct opposition to those priorities. The evidence is clear.
▶ 0:22:01At Massachusetts General Hospital, administrators announced in April 2024 that they would scale back child neglect and abuse reports for mothers who test positive for drugs because they feared that mandatory reporting was perpetuating what they called quote structural racism end quotes.
▶ 0:22:19Duke University Health System, which received over $1 billion dollar in federal funding in fiscal year 2023 alone, was the subject of federal rights complaint in March of this year for implementing race-based preferences in hiring and medical school admissions while promoting the notion that white males are quotes agents of oppression. Corewell Health in Michigan required every employee to sign a pledge in support of DEI or risk termination.
▶ 0:22:47Just two years ago, the Mayo Clinic pledged $100 million for indoctrination sessions about microaggressions and eliminating systemic biases and the supposed dangers of colorblindness and Similar DEI pledges, training mandates, and equity bureaucracies exist at Memorial Health in Illinois, Baton Rouge's General Hospital, Maine Health, Kaiser Permanente, and Providence Health System, just to name a few.
▶ 0:23:15This politically charged approach to health care management is built on the false premise that our medical institutions are mired in bigotry. America's doctors, nurses, and other health care professionals are not racist, sexist, or homophobic. Rather, they work tirelessly every day out of love for the common humanity they see in all their patients. Radical ideology in our health care system is also seriously affecting our most precious patients, America's children.
▶ 0:23:44Between 2019 and 2023, nearly 14,000 minors underwent some form of medical intervention marketed as so-called gender affirming care, including puberty blockers, cross- sex hormones, and more than 5700 irreversible sex change surgeries. Many of the hospitals most deeply involved are nonprofits, including Boston Children's Hospital, the Children's Hospital of Philadelphia, Seattle Children's, Children's Minnesota, and Children's Hospital in Los Angeles.
▶ 0:24:14While all of this has been happening in our country, other nations have been rapidly rolling back those policies. The United Kingdom, Sweden, Finland, and others have taken significant steps to protect children and close this dark chapter of medical history. Chairman Schweit, Ranking Member Su, and members of the committee, your leadership on this issue is vital. By exposing these abuses and demanding change, you are defending both taxpayers and patients.
▶ 0:24:40The American people should not be compelled to subsidize ideological agendas in the name of healthcare. It is time to restore taxexempt hospitals to their proper mission, serving the sick, healing the injured, and advancing medicine free from politics. Thank you very much,
▶ 0:25:00Mr. Chairman, Madame Ranking Member, and members of the subcommittee. Thank you for the honor to testify. I'm accounting and health policy professor. My views do not represent John's Hopkins or any of its affiliations. Nonprofit hospitals have a contract with They're expected to advance charitable mission for the community.
▶ 0:25:28In return, taxpayers grant them tax exempt status. income, property, sales tax, all Our study published in JAMA shows total tax benefits reached 37.4 billion in 2021. More than half was state and local.
▶ 0:25:53Money borrowed at low interest rates allow hospitals to buy real estate tax-free and invest without paying tax on the return. Our new tax notes study shows nonprofit hospitals held nearly half trillion on investment assets issued 180 billion in tax exempt bonds.
▶ 0:26:19So in total generates the nearly $10 billion in tax arbitrage profit. This is just in 2022. They may also access the lucrative 340B drug pricing program. Our house affairs study found many urban nonprofit hospitals have due classified themselves as rural to qualify for rural only perks such as 340B eligibility.
▶ 0:26:48In 2023, threearters of urban hospitals classified as rural or nonprofits, including large academic medical centers such as New York Presbyterian and Cleveland Clinic. Then what charitable activities do these nonprofit households do? The ACA introduced community benefit reporting on IRS form 990 including eight categories.
▶ 0:27:19The category that best represents whether nonprofit hospital advances the charitable mission is charity care. Most other categories aren't comparable across hospitals. Rich ones can hire consultants to package marketing and other expenses per patient care as community benefit. But the charity care is dollar fordoll service provided to the disadvantaged.
▶ 0:27:51Our health affairs study shows nonprofit hospitals give less charity care as a share of expense than forprofit Even Medicaid short for shortfall which also counted as community benefit. Our JAMA network open study finds nonprofits provided no more than fourprofits.
▶ 0:28:17Today nonprofit hospitals really act like forprofits, financial and real estate investment, aggressive debt collection, anti-competitive contracting, etc. But tax exempt status was granted to them based on the situation more than a century ago when hospitals were to solely staffed by volunteers to care for the poor.
▶ 0:28:45It does not reflect today's situation and gives nonprofits an advantage that fuels consolidation in the hospital market. Then what should Congress do? Just counting dollars and mandating a federal number won't work because large hospitals will exploit bright line rules and situations vary very widely across hospitals and communities.
▶ 0:29:11Congress should require hospitals to disclose property tax savings, sales tax savings on IRS form 990. These numbers are straightforward to estimate so local community can grasp what's on the line and local governments can tailor their Congress can also impose excise tax on hospital financial investments and rural asset holdings the same way as Congress taxes university endowments.
▶ 0:29:40Also close the rural urban dual classification loophole that allow urban hospitals access the 340B program and other rural only perks. In the long run, if Congress truly wants hospitals to best serve the community, competition is the key. Remove anti-competitive rules.
▶ 0:30:00Level the playing field, open the market and let nonprofit hospitals compete on equal footing with forprofits, physician owned hospitals, physician practices and other facilities. Also move from subsidizing hospitals to funding patients to truly empower patients.
▶ 0:30:19Once there's a competitive patient centered market, everyone including nonprofit hospitals will have to do the right thing for patients in order to stay in business rather than simply focusing compliance with top-down rules. With technology advancement, competition sparks innovation, slashes prices, raise quality and patients will get real affordability and access that becomes the true community benefit for the American people. Thank you very much,
▶ 0:30:51Chairman Schwikert, me, Ranking Member Sewell, and members and members of the committee. Uh, thank you for the opportunity to testify today. My name is Christopher Whe. I'm a health economist and an associate professor of health policy at the Brown University School of Public Health. The focus of my remarks today is about the US hospital industry and in particular nonprofit hospitals. I first want to acknowledge the importance of access to highquality and affordable health care for all Americans and the important role hospitals play.
▶ 0:31:21Hospitals deliver life-saving care that makes us all healthier and improves our well-being. Hospitals are also a key source of employment. The US hospital sector is among the largest in the economy and alone accounts for over 1.5 trillion dollars in economic activity. Hospital markets in the United States have two key distinct features. First, the US healthcare or hospital sector has experienced decades of unchecked consolidation. Nearly all US hospital markets lack sufficient competition.
▶ 0:31:51As a result, the prices that hospitals charge the 160 million Americans with employer sponsor insurance are high and variable and have little to no link to quality and are not explained by cost shifting. Hospitals currently charge patients prices that average 250% of what Medicare pays. Rising hospital prices do not improve quality and strain affordability for patients, employers, and taxpayers.
▶ 0:32:16Second, over half of US hospitals are While nonprofit hospitals play a critical role in providing patient care and employment to healthcare professionals, the total financial value of nonprofit tax exemptions exceed $ 37 billion per year. In return for tax exemption, the IRS requires that nonprofit hospitals be organized and operated with the purpose of prim primarily benefiting the community. Yet, this does not always appear to be the case.
▶ 0:32:44While hospitals do provide community benefit spendings, some estimates value the tax exemption exceeds community benefit spending by over $25 billion per year. This discrepancy has led to bipartisan efforts to increase oversight of taxexempt hospital uh hospitals and to further regulate their financial assistance and debt collection practices. As I highlight in my written testimony, taxexempt hospitals charge prices, provide levels of care, quality, and charity care that are similar to for-profit hospitals.
▶ 0:33:13Yet, the substantial financial advantage of taxexempt hospitals has led to concerns that quality should actually be higher. If community investment is not larger and quality is not superior, then where are the extra dollars from these financial advantages going?
▶ 0:33:27As I again detail my written testimony, I am concerned that the financial resources may be used in ways that do not directly improve patient care, including increased executive compensation, in investment vehicles and account, which collectively exceed $ 1.5 trillion in value, and marketing, including sponsoring stadiums and sports teams. Tax exempt hospitals also have access to the 340B discount program. My research finds that 340B savings are not passed along to patients. My research with Dr.
▶ 0:33:56B also finds that many nonprofit hospitals duly classifies as both rural and urban hospitals, double dipping to receive the benefits of both and directing limited resources away from rural hospitals. To address these concerns, Congress could consider several policy reforms.
▶ 0:34:13First, high and rapidly route using prices which differ enormously from one hospital to another but not not related to quality or cost combined with substantial investment accounts may create the perception that some taxexempt hospitals are operating with a profit motive. To ensure that tax exempt hospitals fulfill their charitable mission, Congress could define define standards for financial assistance and benefits to the community health sector.
▶ 0:34:38Second, to more broadly ensure that US healthcare markets deliver high quality and affordable care, Congress and federal regulators could consider policies that prevent harmful consolidation in both the provider and insurance systems. This includes strengthening antitrust scrutiny, expanding sight neutral payment policies, and banning anti-competitive contract terms. States as diverse as Indiana and Vermont have elected to directly limit hospital prices.
▶ 0:35:05Third, to address concerns that 340 rebate dollars are not directly benefiting patients, Congress could ensure that improved transparency on each hospital's 340B benefit, narrow 340B eligibility, or extend 340B discounts directly to patients to improve their ability to access affordable care. Finally, Congress can also consider codifying and standardizing existing price transparency policies and ensure that hospitals report required rates accurately and in a timely manner.
▶ 0:35:34In conclusion, Congress can help ensure that the substantial tax benefits nonprofit hospitals receive translate into tangible improvements for patients and communities. Thank you, and I look forward to answering your questions.
▶ 0:35:49Chairman Schweikert, Ranking Member Su, and members of the committee, thank you for inviting me to today's hearing. My name is Jill Horowitz, and I'm the Troman Family Innovation Professor of Law and Professor of Emergency Medicine at Northwestern University. Although the views I express today are entirely my own, my research concerns health policy and nonprofit law. And I've been studying nonprofit hospitals for almost 30 years.
▶ 0:36:14In my testimony today, I will discuss the significance of nonprofit ownership for medical care and the very important uh related tax exemptions. Since I first began researching hospital behavior, the distinct importance of nonprofit hospitals has only grown. In my brief time, I'll focus on three reasons why that's the case. First, nonprofit hospitals are simply the backbone of the American hospital system.
▶ 0:36:42More than half of all hospitals in the United States are nonprofit and almost 70% of admissions to acute care hospitals are to a nonprofit hospital. Nonprofits are even more important for rural health and they account for almost three4ers of all the teaching hospitals in this country. Yet the vast majority of nonprofits are not money makers. In fact, unlike for-profits, the ordinary nonprofit hospital typically operates at a negative operating margin.
▶ 0:37:11So even with the benefit of tax exemp exemption, nonprofits tend to be under financial stress. Things are likely to get worse given Medicaid cuts, declines in employer sponsored insurance, and potential loss of Medicaid subsidies or sorry, marketplace subsidies.
▶ 0:37:28Given these facts, it's simply not possible for nonprofit hospitals to cover the rising costs of providing health care to the uninsured and underinsured in Second, nonprofits are critical because of the services they provide. Because nonprofits tend to be larger than other hospital types, they are more likely to offer every major type of medical service than for-profits are.
▶ 0:37:53and even accounting for the fact that nonprofits tend to be larger than for-profit hospitals, nonprofits are critical because they offer different types of services. In several studies based on decades of data, my research has demonstrated that nonprofits are less likely than forprofits to choose the services they offer based on the profitability of those services.
▶ 0:38:16Comparing similar nonprofit and for-profit hospitals, for example, those that are of the same size serving similar populations, nonprofits are more than six percentage points more likely than forprofits to offer pretty unprofitable services. Obstetrics, psychiatric care are a couple examples. Yet, there are over four percentage points less likely than similar forprofits to offer profitable services like invasive cardiac care.
▶ 0:38:45Some of these services tend to be very expensive and often overused. They prioritize medical services that are important to all Americans. Ownership not only affects the behavior of individual hospitals, but there are also spillover effects. The more forprofits in an area, the fewer unprofitable and the more profitable services all the hospitals in that area provide.
▶ 0:39:11In short, nonprofits do not act like for-profits where it counts, the provision of medical care. Finally, if nonprofit hospitals find themselves under more financial pressure than they already face and are forced to sell their assets and operations, the for-profit buyers are likely to be private equity groups. These groups are much more aggressive at seeking profits than the previous forms of for-profit hospitals that I have studied.
▶ 0:39:37Recent research shows that private equity owners tend to reduce competition, a problem that Professor Whley just highlighted. They raise prices, they increase financial instability, and they have worse patient outcomes than other hospitals. In one recent example, Steuart Healthcare, which owned 31 hospitals with 3,600 beds across eight states, it went bankrupt. It endangered patients and in the end left many communities without care.
▶ 0:40:07The American health care system is facing great challenges. Needs will continue to grow given the aging population, predicted rising levels of uninsurance, and health care expenses, projected declines in employment, and other factors. Nonprofit hospitals provide vital and sustainable services in communities, and the services they provide are more likely than for-profits to meet important social needs.
▶ 0:40:34In today's market and demographic environment, policymakers ought to focus on ways to strengthen and not weaken nonprofits in the American hospital system. Thank you for considering my views. Thank you, doctor. And as my tradition is, I will go last in regards to questions. So, I'm going to ask the chairman of the full committee to begin.
▶ 0:40:58Thank you, Chairman Schweikert. Since 12 hospitals have closed in Missouri, five in my congressional district alone. Um, folks living in the communities I represent, they're forced to drive up to two hours for basic care. And in the south in in the southeastern part of Missouri, otherwise known as the bootill, has not had access to maternity care since 2018.
▶ 0:41:30This is absolutely absolutely unacceptable. But our story is not unique. Um, as patient volumes decrease and paperwork burdens increase from government and Medicare Advantage prior authorization requirements, many independent rural hospitals are overwhelmed to the point of closure unless they are purchased by large nonprofit systems that make enough money in urban areas
▶ 0:42:00to afford losses in rural areas. Dr. Why given the health care and economic challenges faced in rural areas, what can we do to help fortify rural hospitals so that consolid consolidation becomes a business decision rather than a sole lifeline for the preservation of access to care?
▶ 0:42:22and how can we better align reimbursement incentives so that rather than merely throwing money at this problem, we can create an environment in which rural hospitals can thrive.
▶ 0:42:36Thank you for your question and I I certainly agree that rural hospital markets certainly need focused attention and are critical for rural communities. One thing that our research has highlighted is how competitive imbalances often disfavor rural safety net and critical access providers.
▶ 0:42:53If you are a hospital that in some sense is left out of consolidation and don't have the market pl clout of your neighboring uh competitor that has consolidated in many cases you are left with more Medicaid patients more uninsured patients that the consolidated systems nearby refuse to take. I think that improving competition healthcare markets uh can be something that uniquely helps support not just critical assets in rural communities and hospitals but hospitals across the board. In addition, work uh with with Dr.
▶ 0:43:22B has highlighted how many of the financial assistance programs designed to support safety net in rural hospitals in some cases have been taken advantage of by hospitals that are not geographically rural. I think closing some of those loopholes can make sure that existing resources are directed to the intended rural
▶ 0:43:43Perfect. Um, according to recent reporting, there are a there are a growing number of urban hospitals just like what you said. Um, that's masquerading as rural facilities in order to get even more generous benefits under the Medicare and the 340b drug program. benefits that are supposed to go to truly rural hospitals.
▶ 0:44:08According to a stud study published by health affairs by two of two of our witnesses here today, Dr. B and Dr. Why, um over 34 of these so-called duly classified hospitals are nonprofits operating in urban communities. Um Dr.
▶ 0:44:29by is it merely a coincidence that so many of these urban hospitals um that are exploiting a loophole to gain access to benefits meant for rural communities are the same facilities that are pulling in generous benefits as taxexempt organizations or is it safe to say there is a link and sense of entitlement among the leadership of the
▶ 0:44:57I think the regulatory loopholes put the money on the table that these hospitals cannot resist. If Congress does not act, probably very soon the majority of nonprofit urban hospitals will become duly classified in order to access those uh urban uh rural only perks.
▶ 0:45:20So I these hospitals I mean they are all work in their incentive structure and they're going to behave uh according to what the incentive guide them to and this is to me more like a policy failure and create eventually a market distortion.
▶ 0:45:39So the generous benefits bestowed on taxexempt hospitals come with an obligation on their part to provide charitable benefits to their communities. Yet we have um data showing that from 2020 to 2022 over half of such hospitals got more in tax benefits than they invested in their community.
▶ 0:46:03In 2020 alone the taxexempt benefit was worth an estimated 28 billion while the amount spent on charity care totaled over 10 billion less. So Mr. Mr. Hild, um, what sort of excuses do these taxexempt hospitals make to justify the massive deficit between the charity care they provide and the tax benefits that they receive?
▶ 0:46:33And and how has this imbalance been able to grow so substantially in recent years? And what should be done to flip the equation here?
▶ 0:46:44Yes, member, thank you for that question. What I would say is one of the reasons that this imbalance has grown so much is that increasingly hospitals don't see themselves as just healthcare providers or even as hospitals. Um in the report that we put out one of the common themes across all of the executive uh uh seauitees of these hospitals was saying that they only saw healthc care as part of their mission or highlighting other things that they thought were core to their mission that were not be a reasonable person would not consider part of
▶ 0:47:14part of uh providing healthcare. So I think the mission creep of a lot of these hospitals getting into in uh in uh real estate investment, getting into DEI, getting into political activism, naming stadiums. Uh this is shows a a um a lack of discipline in making sure that they uh stay within the healthcare provision. I think that leads to all these other things.
▶ 0:47:40Just like you would want to make sure that if you would want your oncologist to be a specialist, correct? You want your hospital to be a specialist. You do not want a generalist hospital. And I think that's part of the issue is you have a massive mission creep. I think in terms of solutions, one thing we should be looking for is is for Congress to act to make hospitals be more explicit and detailed in the community benefits that they're providing so that taxpayers can know that they're actually providing health care and not off on boondoggles.
▶ 0:48:06Thank you. I yield back.
▶ 0:48:12Why is it not working? The chair now recognizes the ranking member, the gentle lady from Alabama for five
▶ 0:48:18Thank you. I want to thank all of our witnesses. I am uh highly concerned um about healthc care delivery in my district. In fact, I grew up in this district. Uh it's a rural district. Um people know it because my hometown Selma was known for voting rights. But the reality is it's a town of 19,000 and we are lucky and blessed to have a hospital, but we service a lot of the rural communities right around it.
▶ 0:48:43And it's uh in it's disturbing to me that we're um instead of expanding and and creating avenues to health care uh today we're we're really focused at least this hearing is on ways to harm my constituents uh who rely on services from these nonprofit hospitals in my district. A number of the rural hospitals with nonprofit tax exempt status are on the verge of closing.
▶ 0:49:10Since 2011, 16 hospitals across my state, Alabama, have closed. The very existence of rural hospitals is an immense community benefit. They are often the only source of medical care in their area, and they provide essential services like emergency emergency care, screenings, and transportation. They are also major employers in the rural communities that I represent. Dr. Dr.
▶ 0:49:39Horowitz, can you um explain how taxexempt status allows these hospitals to continue playing a critical role in the communities they serve?
▶ 0:49:53Um yes, the the very existence of a hospital in a rural area can be thought of as a community benefit. Without nonprofit hospitals, many rural regions simply would have no hospitals at all. This is exactly what Representative Smith just explained, right? The more rural an area, the less likely there is to be a for-profit hospital. And as you get more more rural, even the nonprofit hospitals can't afford to exist in those areas.
▶ 0:50:23So, they're predominantly government hospitals, if they exist at all. So
▶ 0:50:28I I would assume uh states like mine that didn't expand Medicaid, the pressure the financial pressure is even more mounting,
▶ 0:50:36right? I I I think the financial pressure under the best of circumstances is very difficult in a rural area. And when you have decreases in Medicaid, it gets worse and worse. And so competition can't solve this problem because it's it's not economically possible to exist without subsidies.
▶ 0:50:54Yep. Hospitals in my district have been committed to providing care for my constituents despite Alabama's failure to expand Medicaid. Our hospitals have also endured uh receiving the lowest uh Medicare reimbursement rates in the country uh due to the unjust uh wage index. But those of us from small rural communities uh and and uh small red states uh know that.
▶ 0:51:17Um, listen, I think that the reimbursement rate in this country due to the unjust um, wage index is ahorrent, but it's not going to change because we have winners and losers, and the states that are slightly bigger are the winners. Um, with pending Medicaid cuts and talks of attacking nonprofit tax exempt status, I'm simply burdened with the thoughts um, of the impact on the hospitals in my district. Uh, Dr. Dr.
▶ 0:51:44Horitz, can you has Medicaid expansion impacted the amount of community benefit hospitals provide? And if so, why?
▶ 0:51:52Medicaid expansion allows hospitals to treat more people. If if hospitals need to take patients who can't afford to pay for their care, they're going to have to find the money somewhere. So I I will tell you when I was growing up, we had this uh uh saying in my house which was um there's no money tree in the basement, right? Nonprofit hospitals don't have a money tree in the basement. They have to make their money somewhere.
▶ 0:52:18It has to come from reimbursement or it has to come from profits from offering profitable services. Often services that are are overprovided and are very expensive for the federal government. Yeah. like cardiac care paid for by Medicare or they have to cut unprofitable services. And so if they have to do that, what they're going to do is cut services like psychiatric care, like uh uh drug abuse treatment,
▶ 0:52:48uh which is desperately needed in places with the opioid problems.
▶ 0:52:51Yep. So I I think that that this would only be exacerbated, it sounds to me, by the big ugly bill because it's going to cut Medicaid. So I would think that this would only compound the problem. Can you speak about that with my last remaining
▶ 0:53:07Yes. By reducing Medicaid coverage, by reducing levels of insurance, if people lose their jobs and they cut employer sponsored insurance, we're going to have um worse and worse problems with uninsured Americans.
▶ 0:53:20Thank you. Y back.
▶ 0:53:22Thank you very much. The chair now recognizes herself for five minutes. This hearing continues an important conversation that we began two years ago about ensuring access to quality care for all Americans and making sure that patients have fair and workable options to get the care that they need. At our previous meeting, I raised concerns about the guidelines the IRS uses to determine the nonprofit profit status of a hospital. And unfortunately, not much has changed.
▶ 0:53:50Patients with financial insecurity are still being asked to jump through extensive hoops, providing bank statements, loan records, detailed household budgets on short notice just to find out if they qualify for financial aid. At the same time, these nonprofit hospitals continue to face only vague and limited uh requirements from the IRS to maintain their privileged tax status. And that imbalance, and I think my my Democrat colleagues would agree with me, that imbalance remains troubling.
▶ 0:54:20And if anything, the stories and reporting that we've seen since this have underscored how this system too often favors large institutions at the expense of patients. We have heard a lot of stories today about how these these health care systems are actually wasting money on Super Bowl ads, on stadium naming, on exorbitant pay for executives. I think we would all like to see those dollars being spent on patients on making sure that health care dollars are actually being used for health care.
▶ 0:54:50We've seen that it's been abused. So, Dr. Garb, the community benefit standard is an important piece in determining whether a hospital qualifies for nonprofit status. It requires hospitals to demonstrate that they provide benefits to the broader community and operate to serve a public rather than a private interest. However, in recent years, the standard has come under scrutiny. And with critics arguing that is too vaguely defined and too easily met by certain hospitals. So, is this true?
▶ 0:55:18And if so, how are the nonprofit hospitals taking advantage of the vague language in the
▶ 0:55:25Well, thank you very much for that question. You know, I'm a a clinical doctor. I was a nefologist for 40 years. So I really bow in front of the expertise of all these individuals here who are expert economists. But I would say that this idea of exactly what's a community benefit is very vague and our organization has looked into this and have have tutored me on the on this issue very well.
▶ 0:55:50I think the the point is that hospitals really need to think very hard about the things that they waste their money on. And our point of view is that creating these DEI enterprises has been a huge problem. So let me just read a a brief excerpt from a a testimony by a nurse at the Mayo Clinic. I participated in an event. It was a two-day event in early August.
▶ 0:56:16Mayo's two-day rise for equity event which offered in-person and virtual attendance for continuing education credit. It was designed for professionals including many people in the hospital, administrators, doctors, hiring managers. The goal was to advance and direct policy programs and institutional initiatives across the medical landscape towards health equity. She said, "I encountered nothing but I was told in no uncertain terms that
▶ 0:56:47I've got three more questions I've got to ask.
▶ 0:56:48I'm sorry. I'm almost I'll finish and I'll make my point. Sorry. Racial and social justice is a known public health threat. I learned tips for recognizing, addressing microaggressions. I was told systemic biases in physical space and that such ideas as meritocracy and color blindness are myths. It's very hard to measure the impact of these kinds of activities on an organization, wasting time, wasting resources.
▶ 0:57:12Thank you very much, Mr. Hill. Uh should Congress think about ways to amend the community benefit standard? Why or why
▶ 0:57:18Yes, they Yes, they absolutely should. Taxpayers should know that there's accountability for this standard in return for the tax exempt status and that we can draw a direct line between what the hospital's doing and health outcomes. Having vague standards around activities that aren't tied to any actual outcomes and don't even require any specificity around the money spent, so there's no accountability is a real
▶ 0:57:39Well, I appreciate that. Um, today's hearing I think underscores why this conversation actually matters and the community benefit standard is supposed to ensure that hospitals truly serve the public and not just themselves. But when that standard is unclear, patients end up paying the price while hospitals enjoy tax privileges with limited accountability. It reminds us that when Congress delegates broad authority without sufficient oversight, agencies like the IRS can create policies that foster confusion, unfairness, and added bureaucracy in our health care system.
▶ 0:58:10Our responsibility now is to make sure that those standards are clear, enforcable, and truly aligned with the needs of patients and communities. And I appreciate each and every one of you being here today, and I yield. The chair now recognizes Miss Chu, uh, the gentle lady from California, for five minutes. Just two months ago, Donald Trump and Republicans rammed through their big ugly law, the single largest attack on healthcare in our nation's history.
▶ 0:58:40It slashes $1.5 trillion dollar from our health care system, including nearly a trillion dollar from Medicaid and another $500 billion from Medicare. That means more than 15 million Americans are losing their health coverage, the the greatest loss ever in our history. And it means premiums skyrocketing and hundreds of hospitals pushed to the brink of closure.
▶ 0:59:11This kind of financial pressure threatens the very hospitals that provide lifesaving care and step up in ter in times of crisis. In my district in the Pasadena area of California, after the Eaton fire destroyed more than 6,000 homes, Huntington Hospital transformed its auditorium into a skilled nursing facility for displaced seniors and opened day food pantry for families who lost everything.
▶ 0:59:40That kind of rapid response shows how essential nonprofit hospitals are to their communities and how much they rely on Medicaid dollars to stay afloat. In fact, the American Hospital Association reports that nonprofit hospitals provide a disproportionate share of unprofitable but essential services such as psychiatric emergency care, neonat intensive care, burn units,
▶ 1:00:11and trauma centers. And in 2022, nonprofit hospitals provided an estimated $150 billion in total community benefits. In fact, nonprofit hospitals deliver approximately $10 in community benefits for every $1 received in federal tax exemption.
▶ 1:00:34So, Professor Horwitz, since most nonprofit hospitals already operate on razor thin or even negative margins, how will Republican Medicaid cuts undermine nonprofit hospitals ability to provide those community benefits and step up in moments of crisis like what we experience with the eaten fire?
▶ 1:00:57I think Medicaid cuts are going to make things a lot harder. So hospitals, as you point out, exist in very different communities with very different needs. And we need um we don't want community activities. We don't want community benefits to look the same across all communities. There is no one sizefits all.
▶ 1:01:19uh we need to have hospitals be uh able to respond to the next fire, the next pandemic or whatever emergency we have coming down the pike. So in fact, the flexibility of nonprofit law recognizes this need and it's why nonprofit law does not and never has required charities to have the single purpose of relieving poverty. Right? We need the YMCA. We need museums. We need universities.
▶ 1:01:49None of those are organized solely to relieve poverty. So what we should be focusing on is what nonprofits do best, which is provide medical care. Um uh they are more likely comparing apples to apples to respond to have services that respond to these kinds of crises like substance abuse treatment during um the opioid crisis. U.
▶ 1:02:16Furthermore, in the big ugly bill, Republicans could have extended the Affordable Care Act premium tax credits that keep coverage affordable for 22 million Americans. But instead, they chose to let them expire. Now, on January 1st, premiums will skyrocket. Millions of people will be pushed off their coverage, and more patients will show up at hospitals uninsured.
▶ 1:02:41These patients will delay care until they're sicker and then flood emergency rooms, driving up costs for everybody else. So, Professor Horowitz, what does Republicans deliberate choice to end these tax credits mean for hospitals already operating on thin margins?
▶ 1:03:00I think the ending of the tax credits, the lowering of Medicaid coverage, the aging of the American population, and rising unemployment, and therefore the decline of employer sponsored insurance is going to put enormous pressure on the health care system, including hospitals, especially nonprofit hospitals, since they do tend to operate at lower operating margins.
▶ 1:03:27What this is going to mean is to stay open, nonprofits are going to have to find money somewhere, and that somewhere has to come through their major service provisions. So, they're going to have to offer more profitable services, again, raising prices and spending for the federal government and doing care that may not be needed. Or they're going to have to cut unprofitable care.
▶ 1:03:51And that means care like obstetric care or care like even emergency room care. And we've seen this before.
▶ 1:03:59Thank you. I yield back.
▶ 1:04:03The chair now now recognizes the gentle lady from New York, Miss Maliaakus.
▶ 1:04:08Uh thank you, Chairwoman. And the state of New York, which uh is where I come from, is different than the rest of the country in that all our hospitals are nonprofit due to state regulations. And specifically in my district, we have two nonprofit hospitals that are al also serve as teaching hospitals. Um these are on Staten Island and then I have one freestanding emergency department in Brooklyn.
▶ 1:04:31And these hospitals do a great job of serving our community and training the next generation of doctors, of nurses, of healthcare workers throughout their uh teaching programs. And I greatly appreciate the work that they do there and also in serving our community. In the last year, they served 1.5 million patients. They've treated almost 300,000 individuals in the emergency room. They've delivered 12,000 babies.
▶ 1:04:54And according to the 2023 990 tax forms filed by the hospitals in my district, they contributed over $300 million in community benefits, which included charity care costs, Medicare reimbursement shortfalls, health profession education funding, and reinvestments in the community. These and reinvestments included free health care screenings, uh, food insecurity programs, overdose prevention programs, and many other investments.
▶ 1:05:23But they also are considered major facility improvements and expansions projects to further uh, meet the needs of a growing population, particularly in Staten Island, which is the only burrow in New York City that does not have a public hospital. So my hospitals are taking on a higher rate of uncompensated care and without their tax exempt status these reinvestment opportunities and community benefit contributions would not be possible. And so you know I first I w want to ask Dr.
▶ 1:05:52uh by I agree that we must ensure that our nonprofit hospitals are effectively serving and that they're reinvesting in our communities in order to receive that taxexempt status. Um and obviously the communities across the country they face different challenges. Uh and as I outlined because we're the only public hospital or the only hospital, we don't have a public hospital uh on Staten Island. I think our issues are unique.
▶ 1:06:15So my question is um how can we ensure that the nonprofit hospitals that are operating good faith and spending their money effectively in the communities are not hurt by other requirements um that could potentially hurt their you know one-sizefititall approach to tax exempt status.
▶ 1:06:34So let's say we have a bright line regulation saying every hospital has to provide whatever percentage of the revenue in trader care that will hurt a hospitals struggling on the lines. For example, if this year without that requirement the hospital could stay float that hospital might be closer to
▶ 1:06:54Yes. And second the all if we have a bright land number the number is always gameable right and then the large hospitals and political connected hospitals will be able to do two things one is to hire consultants to massage the number try to look good window
▶ 1:07:12Second would be to try to work with the regulatory process to you know change some little in to in their favor. So that will create a very unfair environment for small ones. That's why whenever we see more and detailed regulations, we see fewer and fewer small players simply because the soil is toxic. They cannot survive.
▶ 1:07:32Yeah. How can we improve oversight uh without overburdening the hospitals?
▶ 1:07:40I believe
▶ 1:07:40that's for you or Mr. Whe Dr. Whe
▶ 1:07:44I I believe competition would help everybody force everyone to do the right thing. Yes. So it sounds like your hospitals in your district are are doing a a strong job in fulfilling their community benefit. We know nationally that is not always the case.
▶ 1:07:59And so I think that uh there can be uh uh policies that uh go into place nationally whether that is uh standardizing community benefit reporting uh following some of the um the the suggestions from the government accountability office in a hearing uh before this this committee two years ago in ways to to strengthen community benefit reporting. Mhm. I just want to make sure they're not going to be overburdened and dealing with more paperwork and more, you know, bureaucracy and red tape and some other things that could be hurdles and administratively.
▶ 1:08:29Uh I think that's really important for us to consider as well. And um one last question on top of the community benefits that I've outlined uh my hospitals they provide 30,000 do 30,000 jobs in our community and so they are uh the largest employer in my district. And uh Dr. Dr. Horwitz, how does the tax exempt status allow for these hospitals to continue providing not only these key health care services, but the jobs for individuals that I
▶ 1:08:57So, the national health care expenditures for 2024 aren't fully analyzed yet, but it looks like we've spent 5.3 trillion or about 18% of GDP on hospital care. So, you know, take about 70% of that may probably more for nonprofit hospitals. And you are by simple math looking at a lot of jobs, right? That nonprofit hospitals are a major employer in the United States.
▶ 1:09:24And if you um put more financial stress on them through cutting Medicaid, through lowering rates of insurance, um you were going to see some realired.
▶ 1:09:36The chair now recognizes Mr. Delaney from the great state of Washington.
▶ 1:09:42Thank you, Madam Chair. Um, I want to thank all of our witnesses for being here with us today. Um, we're discussing what my colleagues across the aisle are calling unfair tax practices at a time when the greatest transfer of wealth is occurring in our country. Uh, the Republican mega bill cut health care for over 15 million people across the country while handing a tax giveaway to billionaires.
▶ 1:10:06The Congressional Budget Office found that the effects of their law will result in working families paying more while the rich get richer. And this is in addition to several other ways Republicans are actively working to systematically dismantle our health care system.
▶ 1:10:21between cutting Medicaid, triggering over$500 billion dollars in cuts to Medicare due to reckless spending, refusing to extend the extended uh the enhanced affordable care act premium tax credits, firing our public servants who work on disease prevention, medical research, and solving future health crises and slashing research dollars. This entire administration has been one broken promise to the American people and definitely a broken promise on healthcare.
▶ 1:10:51And congressional Republicans have enabled this agenda. We know that these cuts to health care will hurt us all and cost us more in the long run. Our healthcare providers have been telling us for months when people lose coverage, when they lose their insurance, and health care becomes more expensive, everyone loses. Our communities lose. Um, in the after effects of the big ugly bill, we know that hospitals have to provide more uncompensated care as a result, making um, it even tougher, especially in our rural areas.
▶ 1:11:22Um, Dr. Horowitz, in your testimony, you note that nonprofit hospitals are more likely to operate at low financial margins. Um, how do you expect these hospitals will respond to the health care cuts included in the Republican reconciliation bill and the increased amount of uncompensated care they will in inevitably end up having to
▶ 1:11:44With rising rates of uninsurance, somebody is going to have to pay for the care that people will need. and nonprofit hospitals, even if they did spend all of their um profits that they could possibly earn on the uninsured in America, they could not cover the need.
▶ 1:12:03Thank you. Um I think it's valuable to note that um I also want to make sure that we uh ensure nonprofit hospitals are adhering to the requirements of the law. And during a hearing on the same topic last Congress, I discussed the Affordable Care Act's requirement for the IRS to audit every taxexempt hospital at least once every 3 years to make sure that they provide sufficient community benefit.
▶ 1:12:28Um, at the time, the GAO, the Government Accountability Office, noted that the IRS has not revoked a hospital tax exempt status for failing to provide sufficient community benefits in the last 10 years. Um the Affordable Care Act um made this requirement because we knew it was important to ensure that hospitals were provided this needed benefit. However, over the last several years, Republicans have continually chipped away at funding for the IRS.
▶ 1:12:54And so, it's ironic that they're concerned about whether these hospitals should have tax exempt status while actively getting the agency and the work that would actually go into place to make sure we're doing these audits and reforcing enforcing uh um any changes. Um, so Dr.
▶ 1:13:11Horowitz again, um, how can Congress work to ensure that nonprofit hospitals know what's expected of them to maintain their tax exemption status without putting these hospitals at financial risk at a time when our health care system is already under
▶ 1:13:25You know, we could continue to invest in the IRS while making sure we're focusing on all the benefits that nonprofit hospitals provide. the I an IRS that focused on major medical services would be very helpful to the system and would would help channel nonprofit hospitals to do the very important work that they that they need to do.
▶ 1:13:48Um but we need staff and we need enough staff in the exempt organizations division to be able to issue guidance to help the hospitals do their jobs. um critically important. And just again, we have um so many important hospitals uh and definitely uh nonprofit hospitals providing important services to our communities in rural areas as well, areas that are already feeling under attack from the the big ugly bill that was passed and um
▶ 1:14:18and putting them at financial risk. And I hope we're focused on making sure our communities have access to great care. So, thank you very much. I appreciate your testimony. I yield back, Mr.
▶ 1:14:28Thank you.
▶ 1:14:30Thank you, Chairman Schwer, for holding this hearing today and to our witnesses for being here.
▶ 1:14:35Hospitals play a critical role in providing health care in our communities. Nonprofit hospitals tax exempt status allows them to invest more resources in improving the access and quality of care for individuals in our Indiana has some strong examples of hospitals that are using their tax exempt status to expand care for some of the most vulnerable individuals and communities.
▶ 1:14:58My district has several rural communities that lack access to some of the most basic health care services and our taxexempt hospitals certainly help fill that gap. For example, St. Joseph Health System uses some of its funds they save through their tax exempt status to operate a mobile medical unit to help increase access to preventative care across my district. Tax exempt hospitals are subject to various reporting requirements in order to maintain their tax exempt status. Dr.
▶ 1:15:26Why in addition to certain legal requirements and the community benefit standard, I understand that taxexempt hospitals are also required to file form 990s for IRS review. This form requires nonprofit hospitals to report a lot of generic information about employees, revenue, assets, tax compliance, but tax exempt hospitals are also required to include what is called schedule H, which is used to collect information on activities and policies of hospitals as well as community benefits provided
▶ 1:15:57by the hospital during that specific tax year. In your opinion, are the current reporting requirements for nonprofit hospitals sufficient to ensure that nonprofit hospitals are providing real community benefits and operating within their tax exempt
▶ 1:16:13Thank you for the question. Indiana in particular is a market that has I I think it especially at the state employer and community level focused lots on hospital prices and hospital markets in the last several years. In regards to schedule H, I don't think the current requirements are adequate.
▶ 1:16:29For example, many hospitals are parts of large conglomerates and mega systems which often report a schedule H at the system level which does not allow for uh auditors, researchers, and policy makers to understand community benefit reporting at the individual hospital
▶ 1:16:46Got it. And are there other pieces of information that you believe nonprofit hospitals should be required to report to the IRS
▶ 1:16:54in addition to reporting schedule H's for individual hospitals? The current requirements for schedule H reporting are often quite vague and additional reporting requirements for schedule H in detail on individual line item spending for schedule H could allow allow for a more further detailed auditing and accounting of community benefit
▶ 1:17:14Right. Thank you. And Mr. Hild, it should come as no surprise that given the massive value of nonprofit hospitals tax exemption, some nonprofit hospitals choose to spend money in various ways. We have discussed the spending on real estate stadium rights specifically. Uh but I also understand that tens of millions of dollars are spent on advertising every year. That ultimately uh raises, you know, of course questions about why they chose to do this and whether advertising and marketing spending might be going on.
▶ 1:17:42While it certainly makes sense for some hospitals to spend money on advertising and marketing, of course, at the end of the day, nonprofit hospitals certainly want to make sure that patients know where and how to utilize their services. Is there an amount or type of advertising or marketing spending that seems unnecessary or frivolous to you? And if so, can you provide some examples?
▶ 1:18:02Yeah, that's a a great question, member, and I I agree that there certainly are instances where you'd want a hospital system to be able to advertise specific services to a community to make sure that they're aware of those specific services and how to access them.
▶ 1:18:17What I would say is an egregious abuse of their taxexempt status is spending large amounts of money simply on brand ID on superfluous uh Super Bowl ads like we saw from NYU Langoni where they spent ostensibly $8 million to simply you know promote their brand. I think most people in New York in that area already know where to go to the hospital uh and if they're sick to go there. Most people don't need to be told told that via very expensive Super Bowl advertising.
▶ 1:18:43So I think when you have a a situation where it's simply a hospital system uh uh polishing their own brand that is a waste of money and an abuse of the tax exempt status.
▶ 1:18:54Thank you. Nonprofit hospitals are an important part of our health care system and in some cases the patients only way to access care. We need to make sure that nonprofit hospitals that use the program responsibly are protected while hospitals abusing the system are held accountable. Thank you, Mr. chairman and I yield back.
▶ 1:19:13Thank you. Because I've lost Mr. Swisi for a moment. We're going to actually under the committee rules, we're going to go to two to one. Mr. Miller.
▶ 1:19:24Thank you, Mr. Chairman, and thank you to all our witnesses for being here today. Maintaining the highest quality standards of care in our nation's hospital is a key priority. As has been discussed, nonprofit hospitals are deemed to be those operated for charitable purposes with a mission to serve the public good, providing community benefits.
▶ 1:19:43Nearly half of American hospitals are nonprofits aimed at advancing the health of patients through charitable and community care, meaning providing innovative breakthroughs in treatment for their communities and the nation at large. In tandem, transparency of care is a foundational mission for our nation's hospitals and health systems. I understand hospitals in northeast Ohio provided 2.6 excuse me around $2 billion in community benefits in the year of 23 according to the most recent analysis we have.
▶ 1:20:13Such key efforts among of others include a diabetes center in Cleveland's economically stressed areas, empowering public safety medics with life-saving training, groundbreaking cancer screening for first responders, supporting more than 20,000 food insecure children, and funding the Leads Safe Cleveland Coalition. A recent report also noted compared to other states, Ohio hospitals spent more on community health improvement services, a positive sign that they're investing in upstream and unmet health needs.
▶ 1:20:44The mission of all hospitals and health systems, regardless of size and type of ownership, is to care for their patients and communities. Likewise, sound, accountable, and transparent use of taxpayer funds is paramount to ensure the highest levels of integrity in patient care. To Dr. Dr. Chris Whe. Dr. Whley, you noted in your testimony, nonprofit hospitals play a critical role in providing patient care.
▶ 1:21:08As you know, uh, nonprofit hospitals carry a community service mission and current statutory requirements mandate that hospitals must maintain a publicly available financial assistance program and conduct community health needs assessments to identify key health concerns, soliciting input from un underserved, low-income, and marginalized communities. How can these benchmarks ensure the highest levels of transparency and integrity in community care in our country?
▶ 1:21:36And how can transparency be strengthened to demonstrate the full breath and accountability of nonprofit charitable and community care?
▶ 1:21:45Thank you for the question. uh and related to to my previous response, I think there could be increased transparency on spending on each of those components so that we can essentially compare what is the value of tax exemption with the the value of community benefits. I would also note that while many hospitals do provide uh nonprofit hospitals do provide community benefits, uh many of the the hospitals with the highest prices in the country are large non-hrofit hospital systems and so we we pay for many of those services uh through the backs of patients.
▶ 1:22:15Thank you for that, doctor. Dr. B, not your testimony, nonprofit hospitals face significant operational challenges, including declining collection rates on medical bills and low reimbursement rates for many patients. Many nonprofit health providers serve a large share of Medicaid patients. One major hospital system in my region delivers more than 50% of its care to Medicaid recipients. They also treat a growing number of Medicare patients despite the program's low reimbursement rates, as well as the uninsured.
▶ 1:22:44Please share your thoughts on how Congress can strengthen the viability of the health care system for patients, providers, and American
▶ 1:22:52Thank you. I believe the root cause for the unaffordability of hospital care is a high price comes from the high operating cost of hospitals. If you look around other markets, technology always bring lower cost. But that's not happening in healthcare. Why? is because of lack of competition. There's an example. One private equity firm purchased a hospital especially nonprofit hospital.
▶ 1:23:21They cut the admin staff by onethird while still maintaining the quality of care. This is coming from a journal house uh journal of financial economics study looking at more than 1,000 deals. That's a conclusion. So that means at least there are some redundancy in the cost structure of many our nonprofit hospitals.
▶ 1:23:40without competition why would any hospital CEO cut cost there's no reason right so they they want to become more lean in operation only when there is external pressure so I believe once we have enough competition in the market they will try to make their operation more efficient that will directly lead to a lower cost of care that is true affordability and access for our
▶ 1:24:04I'm smiling thank you that was a very uh well and thoughtout answer and I could not agree more with what you had just laid out is um I won't name any hospitals within my district, but some of them are undergoing some of the same things um and seeing how we can consolidate and do better. So, I just want to say thank you uh for that answer moving forward. Uh Mr. Chairman, I yield
▶ 1:24:27Mr. Chairman, on behalf of my colleague, Mr. Panetta, I would like to ask unanimous consent to include in the record of this hearing the 2024 annual report of the Sutter Health which uh serves his district.
▶ 1:24:41Without objection.
▶ 1:24:42Thank you very much,
▶ 1:24:43Mr. Swazy.
▶ 1:24:45Thank you, Mr. Chairman. I'd first like to uh start by associating myself with the remarks of Congresswoman Malotakus from my state of New York where all of our hospitals are required by law to be not for-p profofit. uh and she was sounded in her remarks very praiseworthy of the not for-profit hospitals in her district as far as the care they provide, the community benefits they provide, and the employment they provide. So, I want to associate myself with the her remarks.
▶ 1:25:10I feel the exact same way about the not for-profit hospitals in my district as well, which is along the north shore of Long Island and Northeast Queens uh in New York. So, I want to thank the witnesses also for their time here today. I really appreciate you taking the time to be here with us and share your your backgrounds with us. Uh I think I want to ask you first. You're all aware that people in America are very concerned about their health care costs, right? Mr. Hild, you're nodding your head, right? You're aware of that. Dr. Goldfarb, you're aware of that. Dr. B, Dr.
▶ 1:25:40Wally, Wally or Whley Whe Dr. Horowitz. And people's health insurance premiums are really just really high. And that's one of the things that they're really worried about is their health insurance premiums. And if you ask the American people, what are the issues you're most concerned about in America today? Most people say the number one thing is affordability and the cost of living. You know, that's tied to the economy as well. But that's the number one concern people have.
▶ 1:26:05Now, I don't know if you're aware, but currently many insurance policies in America are subsidized by a a premium tax credit that makes the Affordable Care Act insurance more affordable for people. And that premium expires on December 31st of this year. Are you aware of that? Mr. Hild, are you aware that Dr. Ger, Dr. B, are you aware of that? Yes. Dr. Whley, Dr. Horowitz. Okay. So, there are some of us, Democrats and Republicans.
▶ 1:26:35There are 11 Republicans and six Democrats, of which I'm one of them, are saying we should extend the premium health care care tax credits at least for a year. I actually think it should be more than that. uh as part of this debate that we're doing now about closing down the government because if we let these premium tax credits expire, then people's insurance rates are going to go through the roof. So, and it's not it's not just me, you know, Democrats versus Republicans.
▶ 1:27:04I have Senator Tom Tillis said in early September, he said, "I think it's a bad policy and bad politics to let these premium tax credits expire." And the co-sponsor of this bill with me, uh, Congresswoman, uh, Kiggins, said that there are 33,000 people in her district that rely on this tax credit to make their monthly health insurance premiums more affordable.
▶ 1:27:27If Congress fails to act, those same Virginiaians will soon face shocking cost increases that could put essential health care coverage out of reach. We can't pull the rug out from under hardworking families. We must give Americans more time to plan. So she's talk and then she talks about how much everybody's health insurance premiums would go up. And then Congressman Fitzpatrick says the same type of thing. Letting these subsidies expire without a plan would put healthc care coverage out of reach for millions of families in my community and across the country.
▶ 1:27:57This bipartisan targeted extension will prevent disruption, protect access, and it goes on and on with other members talking about how devastating this would be in their community. So based upon what you're hearing, do you think it would be a good idea for to us at least extend these health care premiums for uh at least a year? I think it should be longer than that to at least figure out a plan for us how to deal with this so people's health insurance premiums don't go up. What do you think, Mr. Hild, Dr. Mr.
▶ 1:28:27Um well that's sort of out of the purview of of uh what we issued our report on but I would say that to your point about affordability and price control. Uh I completely agree that the average person is focused on that and that's why we think it's so important that hospitals focus on just the provision of health care and cut out any extraneous costs so that they can pass that savings on to the consumer. And I additionally say,
▶ 1:28:51you know, you know what would happen is a lot of people if they don't have insurance because they can't afford it, they're going to show up in the emergency rooms of these hospitals. It's going to cause the cost to skyrocket. So let let me ask Dr. Garbar, what do you think? Do we think we should let these premium tax credits continue?
▶ 1:29:07Well, as I said before, I'm no expert on these issues. I must tell you though that I've been in meetings like this for 35 years and the problem has been the rising and and soon unaffordable cost of American healthcare. You people in Congress, you need to fix the health care system and this is not about just changing insurance premiums. This is about a fundamental reform that must go on and and I look very forward to seeing that happen.
▶ 1:29:30I think that's an excellent point that you're making Dr. Gar. But in the meanwhile, we don't want to see these people all lose their insurance. Dr. B, do you have a position on this? Yes, I do. I don't think we should extend because the insurance is not the same as coverage and we have seen many people covered but then face medical bill second. So these fundamental reason you're okay with these people losing their insurance.
▶ 1:29:49No, the fundamental reason for the high premium is because AC regulations prevent insurance companies.
▶ 1:29:55No, but we can't fix that between now and December 31st, can we?
▶ 1:29:58I if we have the money to spend, let's fund the patients, let them control the money, then they make the choice that will totally transform our healthcare market for everybody's benefit.
▶ 1:30:07Very good. Thank you, Dr. Whley.
▶ 1:30:11In many states, insurance premiums are expected to rise 20 to 30%, which I I think is a substant
▶ 1:30:15No, some people are saying 50 to 200%.
▶ 1:30:18Uh substantial shock for many patients. Uh having some sort of smoothing would probably be beneficial, but I I think it's also important to to recognize that rising hospital prices are a key driver of why insurance premiums.
▶ 1:30:29Thank you so much. Okay, I'm out of time. Can Miss Harowitz answer or should I stop? Miss Harwood, you want to answer
▶ 1:30:34Thank you. Yep. Insurance prices are going through the roof and now is not the time to increase insurance costs even more. So, if the tax credits are allowed to expire, we're going to see even more people be uninsured.
▶ 1:30:46All right, Mr. Bean.
▶ 1:30:48Thank you very much, Mr. Chairman. A very good afternoon and good afternoon, Ways and Means. And to our panelists, welcome. We're glad to have you here. If you're just tuning in, if you just turned on C-SPAN, we're in Ways and Means, and we're talking about uh we're talking about taxexempt status for hospitals.
▶ 1:31:05Now, we know all hospitals are different, and not all hospitals are like every other hospital, but we're trying to determine whether taxpayers are getting a good deal by Congress granting taxexempt status to certain hospitals. There's always been a kind of an agreement that with taxexempt status, uh, we'll get more we'll get more as, uh, these hospitals will give more in community care and investing back in the community than the, uh, amount of the tax exempt status.
▶ 1:31:34Uh, but, uh, here's the numbers. Here's the numbers. Uh, it's no secret the value of tax exemption for nonprofit hospitals has ballooned in recent years, rising from 19 billion in 2011 all the way up to 28 billion in 2020. What some may not know is that during the same time period, the the tax exemption value at 28 billion in 2020, we're only getting 16 billion back in charity care. So the numbers are already underwater. So Dr.
▶ 1:32:03Ba, does the difference in the value of the tax exemption for nonprofit hospitals and the amount spent on charity care suggest do these hospitals still deserve taxexempt status?
▶ 1:32:15No, I don't think so. That is coming from more than a century ago. At that time, hospitals were purely staffed by volunteers and only caring for the poor. Now time have changed.
▶ 1:32:25I got you. No, thank you very much. So, it's uh the numbers. I've done the math in my head and I've done it on paper and uh it's something that Congress needs to look at. Now, I mentioned all hospitals are not the same. I know in Florida, we've got great uh hospitals that exceed uh what they're expected to do. UF Health, Advent Health, Mafet Healthc Care, Florida's premier cancer hospitals was in my office today bringing their report card and showing that they're not on the naughty list. Uh but Mr. Hild.
▶ 1:32:55Uh IRS data from more than 2400 nonprofit hospitals using 2021 IRS data showed staggering results finding that 80% of evaluated tax exempt hospitals spent less on financial assistance and community investment than the estimated value of their tax breaks.
▶ 1:33:14Uh some hospitals went on to that the study says they went on to spend money on DEI green energy initiatives amassing real estate portfolios and advertising spending money to put stadiums uh their name on stadiums. What does that data tell you Mr. Hill? What say you?
▶ 1:33:32It it tells me that some of these hospitals are betraying the fundamental agreement that they made when they took their tax exempt status. The whole concept of providing that is that instead of profits going to shareholders or executives, they would be reinvested back into healthare.
▶ 1:33:46Should the IRS be more strict in interpreting or should Congress come up and maybe re-examine the uh the criteria for for receiving tax exempt status?
▶ 1:33:55I think both of those would be a great great idea. I think the IRS should be more stringent in what they count, but I the Congress should probably act to make it clear what the constraints are and making sure that that surplus income from the provision of services goes back into the provision of healthcare.
▶ 1:34:10Very good. Uh I have concluded my questions. However, I'm not concluded with my remarks. Uh we keep talking about these uh premium tax credits and Dr. Ba, you brought up a great uh a great point. It's uh if we want to reduce the cost of healthare uh the extending these tax credits does not reduce the cost of health care. It just merely transfers the cost of it continued uh back on the on the backs of the taxpayers.
▶ 1:34:35Let it be known that people on the other side of the aisle uh extended these credits during COVID. They're the ones that uh allowed them to end at the end of this year. CO is indeed over and I think if we're going to as uh Dr. Dr. Goldfarb, thank you so much for your comments. Healthc care needs to be fixed. We've got a lot of work to do and just transferring the cost of it from one segment to another. Does it fix the problem?
▶ 1:34:59So, Congress does have work to do and uh members on both sides of the aisle, I look forward to working with everybody to make sure that happens. With that, Mr. Chairman, I yield back.
▶ 1:35:11Thank you, Mr. Chairman. Uh to all of you panelists, thank you for discussing this very important topic. Today's uh hearing topic is indeed important for a number of reasons. Tax exempt hospitals back in East Texas where I'm from, I can tell you, play an incredibly beneficial role in our health care system, ensuring that the most un underserved and vulnerable patients receive life-saving care. And I'm certainly proud of their valiant efforts.
▶ 1:35:36I worked closely with them as a county judge, as a member of the city council, and in various roles throughout my uh time there in East Texas. But and and in my experience, it's clear that many nonprofit hospitals are like that. Clearly across the the nation, correctly utilizing their tax exempt status to invest back into the community, ensure health care for the poor and underserved, and provide a broad benefit to the community at large, one that serves the broader public interest. But here's the concerning part.
▶ 1:36:04Uh we're seeing growing evidence that far too many hospitals are using their funds in a manner contrary to the public interest and unrelated to appropriate patient care and the trend is not good. Dr. Goldfard, I want to start with you. In your written statement, you say, quote, "Too many of these institutions are squandering their taxpayerbacked resources on ideological experiments.
▶ 1:36:27To me, it is deeply concerning that some taxexempt hospitals, frankly, any hospitals, are diverting dollars from underserved communities to DEI initiatives, climate activism, and something that they call gender affirming care for children, which I think is an incorrect term, things like puberty blockers, cross- sex hormones, and irreversible surgeries.
▶ 1:36:48In your testimony, your written testimony, you list just five hospitals that perform sex change interventions, including medications and surgeries to over a thousand children in 5 years. That would include uh places like Boston General, Boston Children's Hospital, the Children's Hospital of Philadelphia, Seattle's Children, Children's Minnesota, and Children's Hospital in Los Angeles. It's disgusting to me.
▶ 1:37:13And I want to ask, do you think spending uh money on these types of activities is what the community benefit standard was intended to achieve?
▶ 1:37:22No, thank you very much for that question. Yeah, you know, they hospitals have seen themselves as being sort of centers of social engineering here and both in the DEI world, it was an idea of uh writing what they believe was the basis for healthcare disparities. Healthcare disparities amongst populations is is a real phenomenon. but to attribute it to racism on the part of doctors was an easy way out and one without real evidence.
▶ 1:37:48And so they they've invested enormous amounts of money in sort of changing the composition of the healthcare workforce with the goal of getting rid of healthcare disparities. And the evidence, excuse me, in the medical literature is quite clear that that's not going to work. Better access is going to be the solution both on the part of patients and the part of hospitals. And as far as the gender affirming care, this has been a disaster. Amount huge amounts of money have been invested in these programs.
▶ 1:38:15The medical evidence is quite clear and it's been suppressed by the sides that have advocated for it that these children are benefited. There is no evidence that they're benefited. There's much evidence that the children are harmed by these large doses of drugs or terrible surgical procedures that have really changed their lives.
▶ 1:38:31I completely agree, Dr. Goldfart is harmful, I believe, physically and emotionally and in a number of different ways. Mr. Hild, you said earlier that we should quote cut out extraneous costs. Would you put uh these uh quote gender affirming care activities within your definition of extraneous costs that we need to cut out?
▶ 1:38:51100%. Not only are they extraneous, they're extremely harmful to the most vulnerable members of our society, which is of course children. So, I think it's both uh morally reprehensible that hospitals have engaged in this care, but also that they would try to claim that it's a community benefit.
▶ 1:39:06Dr. Dr. Bay, do you think it serves the public interest for us to continue to pro provide taxexempt benefits to hospitals that provide this kind of atrocious treatment to children?
▶ 1:39:15No, I don't think so for this or any other population harming activities.
▶ 1:39:21What about you, Dr. Why?
▶ 1:39:25I'm not a clinician, so I don't want to comment any one individual's patient care, but I think these decisions should be made between the patient and the Yeah, I I completely agree with uh the panelists that have have said this is not the type of public interest that we need to serve with our tax laws. Certainly, it's contrary in my belief to uh the the greater public interest. This is not the first time that a few bad apples spoil the bunch.
▶ 1:39:50But the irresponsible use of these tax benefits in far too many many nonprofit hospitals is contrary to as I said to the public interest and belies the original intent of our tax code provision in this regard. Patient access to care ensuring quality of care and doing so in a manner that benefits the patient and the community at large should be the goal, not scientific experiments that are detrimentally harmful to our kiddos.
▶ 1:40:15anything to the contrary to this stated appropriate goal uh should not receive and see special tax treatment. Mr. Chairman, I yield back.
▶ 1:40:25Thank you. Um members notification. We're probably going to have votes called in few minutes. If it's a 15minute vote, we're going to try to race through. I'll ask everyone to be as efficient as possible. Dr. Murphy.
▶ 1:40:36Thank you, Mr. Chairman. Appreciate you guys coming today. Quick note, I'm just not going to get sidetracked. The premium tax credits are a boondoggle for insurance companies. They say they're going to raise rates. It's only for their profits. Period. Period. Look at the data. Yes, we can reform this, but all most of that money went to insurance companies. So, let's not be fooled who's making the money in this and who's where it's coming from. So, uh Dr. Goldfarb, America's doctors, nurses, and other health care professionals are not racist, sexist, or homophobic.
▶ 1:41:06They are deeply committed and caring people who work tirelessly every day out of love for the common humanity they all see in their patients. Spot on. I don't know what the hell has happened with the leadership in medicine. This has been the greatest peer pressure event since the Spanish Inquisition that they feel DEI equity over excellence is good for patient care. Shame on all of them.
▶ 1:41:28And the fact that they are c committing what I believe is medical malpractice on children for the sake of profits is dastardly and cruel. And thank God Sunlight is now disinfecting some of these places. The Cleveland Clinic, Boston Children's, all these places should be absolutely ashamed of themselves for succumbing to peer pressure for the perms of profit. Thank you for helping highlight that nonsense. I'm going to drill down and get a little esoteric because both you and I understand this.
▶ 1:41:58If we look at what's been going on, the DEI, the social justice, the climate activism, the gender transformation, we know that the doubleAMC, the LCME, the ACGME control a lot of these nonprofit hospitals through their uh residency and medical schools.
▶ 1:42:16Yes. So the these uh leaders of these institutions have been polluting medicine, polluting health care, polluting education and then subsequently holding a lot of these hospitals hostage because they don't get accredited. The LCME comes in like a bunch of bullies and comes in and tells you what you're doing wrong with no This is what's going on. All of these people, all of these people, all the leadership need to go. Period.
▶ 1:42:43They have destroyed medical education in this country. You and I both know this, but they hold so many of these hospitals hostage. I personally think any hospital now that has any general affirming care, anything with DEI, if they're nonprofit, boom, that status is revoked immediately. That needs to happen. So, how do we get the doubleAMC, the LCME, the ACGME to reverse the course of nonsense that they've been doing? Well, that's a big job.
▶ 1:43:13You know, unfortunately, the leadership of these organizations is usually u voted on by a very small percentage of the
▶ 1:43:21and it's self-propagating
▶ 1:43:22and it's self-propagating and and you've been a great leader in this area and we really congratulate you on that. I think this is going to require the public. It's going to require you all speaking out, us speaking out about this and making people aware. And I think there has been a change.
▶ 1:43:38I think there has been a sense that this this DEI enterprise particularly in graduate medical education which is related to the hospitals particularly the ACGME that regulates that and oversees it has now announced that they're going to resend their DEI activities. Now the problem is is this going to be a lasting change? Is this just going to be a tangent uh exceeding to the current view and the current government that's in place? And I hope that's not the case.
▶ 1:44:07But we're fighting very hard. We're fighting with lawsuits. We're fighting with efforts at legislation around the country. And we'll continue to fight and I think it's going to be a long fight, but it's one that we must engage in because it is important for the healthy American people.
▶ 1:44:21I thank you for doing it. It it honestly just reverses how long we've been trying to have objective scientific medicine. And when you let all this nonsense pollute what is medicine, you know, you and I have taken care of patients. We don't give a damn what they look like in front of us. This is just ridiculous. It's what it's happened. Now, I I'm going to diverge a little bit going back to some of the nonprofit stuff.
▶ 1:44:45Why the hell should anybody have naming rights to a stadium from a nonprofit when they're going to cry that if Medicaid reform comes down, they have uncompensated care? Tell me how tell me how anybody can defend that.
▶ 1:44:59I don't think it can be defended, especially, member, at a time when these hospitals don't provide any price transparency. They seem to be acting as if they've run out of ways to invest in the provision of care in a better or more cost affordable way. If that's the case, then maybe they don't need these
▶ 1:45:14Well, you know, I get advertising and I know it's a tough market in some certain places. I get it. But when you have been given a privilege of a nonprofit status, uh somebody commented earlier that they've I think it was Dr. by has come they they've just taken too much length out of their rope and it's time to pull this back and actually boardrooms need to have their presidents and their CEOs now accountable to the American taxpayer. Thank you, Mr. Chairman. I'll yield back.
▶ 1:45:42Thank you, Dr. Murphy. Mr. Davis,
▶ 1:45:46thank you, Mr. Chairman, and I certainly want to thank all of our witnesses for being here and sharing your expertise and experiences with us. The recent Republican law rips health care from more than 15 million Americans, shutters hospitals, kicks people off, take people away from their nursing homes, and strips health insurance from millions of people.
▶ 1:46:15Today's hearing is yet another page from the Republican playbook to take from the poor, from the disabled, and from the sick to give to the wealthy. Today's hearing attempts to justify further wreckage of our health care system by stripping federal tax benefits from nonprofit entities that serve the needy to bolster forprofit health
▶ 1:46:45care with a special target on urban Dr. Horitz as your elected I'm grateful that you've come and sharing your time and expertise with us.
▶ 1:47:03Your testimony was especially insightful because you make clear that the community benefit of nonprofit hospitals greatly exceeds the dollar value of the free services they provide in so many ways such as providing essential and less expensive services. So Dr.
▶ 1:47:30Horus, could you please explain why nonprofit hospitals meet the community benefit standard in ways beyond a single measure of free care?
▶ 1:47:46And can you speak about how cutting the federal tax benefits for these hospitals would undermine nonprofit hospitals, destabilize the health system, and dangerously degrade care for the vulnerables needed.
▶ 1:48:08It's a privilege to be here today, and I'm grateful to be represented by you today. We have heard from pretty much everybody on this panel uh on the committee of some particular thing that a nonprofit hospital does in their district to provide the services that are especially needed there. We've heard about construction of new facilities.
▶ 1:48:35We've heard about mobile medical There are countless examples of public benefit that's offered by nonprofit hospitals that is something different than free care for medically indigent patients. Free care is critically important, but it is certainly not the only care that's needed.
▶ 1:48:58In addition to these other services that we've heard about today, nonprofit hospitals do something that's very hard to measure. It's the dog that doesn't bark. They don't maximize profits. They don't offer services that are extremely profitable but sometimes unnecessary. And that saves all of us money that we'd otherwise be spending.
▶ 1:49:21If more and more people become uninsured and more and more people don't have access to public insurance like Medicaid, then nonprofit hospitals will have to make up the money somewhere. And one of the places they'll have to do that is to by providing these very expensive, sometimes unnecessary
▶ 1:49:44Thank you very much. And uh I yield
▶ 1:49:48Thank you, Mr. Davis. Uh Miss Miller.
▶ 1:49:51Thank you, Mr. Chairman.
▶ 1:49:53And and forgive my interruption. Votes have been called, so we'll try to I appreciate the opportunity to be able to discuss the taxexempt hospital statuses and what our hospitals are doing to fulfill their community benefit standards. I represent the wild and wonderful state of West Virginia, which has one of the largest rural populations in the country. Our rural hospitals go above and beyond to provide patients with the care that they need.
▶ 1:50:22Many of these rural hospitals can provide such community services with the savings from being taxexempt entities. I think this is a fair tradeoff for hospitals to make. But I've recently been alarmed at the growing trend of urban taxexempt hospitals reclassifying as rural to receive additional benefits that are really meant to treat our most vulnerable rural patients. This spreads limited resources even thinner at the expense of many of my constituents.
▶ 1:50:53And I'm thankful for the work that two of our witnesses to do today, Dr. B and Mr. Why to uncover more information about this trend. Dr. B, critical access hospitals are often the only site of care for essential health services in their community. The benefit they provide to their communities seems pretty obvious.
▶ 1:51:15These rural hospitals have been shown to provide a higher share of health services as a percentage of community benefit than other types of hospitals, including nonprofit community hospitals, children's hospital, and teaching hospitals.
▶ 1:51:30According to your recent study about the rise in urban hospitals with rural status in Medicare, there has been a sharp increase of geographically urban hospitals dually classifying as both rural and urban to access benefits intended for those hospitals serving our rural populations. Your study further showed that threearters of these dyed hospitals were nonprofits and thus taxexempt.
▶ 1:51:57In your opinion, does this growing trend of dual classification lead to truly rural hospitals receiving even less resources to provide community benefits?
▶ 1:52:08Absolutely. If Congress does not act to close the loophole, we're going to see more and more nonprofit hospitals do classified taking advantage of the status. the result will be smallest and smaller poor money left for the truly rural rural hospital located in rural areas and that probably will not be the result Congress um intended to see.
▶ 1:52:31Thank you. Dr. Goldfarb research suggests that the fair share deficit or the difference between the value of tax benefits received and the value of community benefits provided by a nonprofit hospital continues to grow each year.
▶ 1:52:48The fair share deficit at nonprofit hospitals was estimated at 11.5 billion dollar per year from 2020 to 2022, suggesting that taxexempt hospitals are spending significantly less on community investments and benefits than they receive through their tax exempt status. Is this correct?
▶ 1:53:12Well, as I said earlier, I'd certainly defer to my these expert economists here that can speak to that particular issue. It is quite clear though that this community benefit needs to be clarified. The DEI enterprise, the gender affirming care, they've all been included in this idea of a community benefit. And I think one can really challenge seriously the fact that these enterprises, if anything, been divisive.
▶ 1:53:37Certainly the DEI enterprise as I mentioned earlier the Mayo Clinic having that two-day meeting which just leads to more animosity more divisiveness more unhappiness in a staff and yet that's a huge investment. It's a huge investment in resources. It's a huge investment in dollars. It's a huge investment in human capital to these activities. So I feel very strongly that that's why this needs to be clarified by Congress and the community benefit needs to be outlined much more clearly than it is now.
▶ 1:54:06Thank you. Thank you so much. I'll yield back my time. Thank you.
▶ 1:54:10Thank you, M. Mer. Miss Ples,
▶ 1:54:12thank you so much um for the opportunity to speak here. You know, I live in an area that's not only rural but isolated living in the Virgin Islands. Um and we have, I must say, an amazing group of doctors who have are absolutely dedicated to their profession. I know so because I know that they are working with very little support. We don't have a nonprofit or a profit hospital.
▶ 1:54:38We have government, local governmentowned hospitals that are operating there. And in the Virgin Islands, because we're our territory, we have a terra rebasing that's from 1992 and 1989, which means that our docs are not getting the level of reimbursement for the services that they're providing.
▶ 1:55:01The increase in cost of supplies has meant that vendors want money upfront to be able to pay the cost of what it takes care to take care of people. And we have um a reimbursement that of care that's only about 45% of what the revenues that they should be bringing in in our hospitals.
▶ 1:55:24our hospitals, the administrators, our doctors in the Virgin Islands are really almost victims of their own um being a able to juggle so many things and get things done. And at the end of the day, who's hurt by that? Not just the doctors, but of course the patient. 30% of the children in the Virgin Islands live in poverty, which means that Medicaid costs are absolutely skyrocketing.
▶ 1:55:52And rather than my colleagues talking about gender affirming care or engaging in the social disarmament that they're trying to do with the American people by raising people's hackles about that. Let's talk about the everyday care, the everyday things that so many Americans are still not able to afford because this committee has not removed the cap on Medicaid for the Virgin Islands.
▶ 1:56:20Even though it's been great that we now have a permanency rate of 83% by the feds and 17%. It means that because we're capped at Medicaid, all of the people of the Virgin Islands cannot able to receive care.
▶ 1:56:34And our government elects rather than to go into debt and pay for people who are not there to roll people off of Medicaid, which then increases uncompensated care, which then means that the hospitals do not get the revenues that they have, which means that they can't pay for docks. We have at one point one anesthesiologist in a hospital on one island.
▶ 1:56:59That's In August, a large number of our doctors uh wrote a note to a letter to our local government saying that they were fearful that they were not able to meet their hypocratic oath because of the shortages in our hospitals.
▶ 1:57:16And so I think that the time that we have spent could have been really well spent talking about that rather than scaring people about um very minute fractions of surgeries and care that goes on.
▶ 1:57:30Um but while we're exe discussing this tax exemption um I do want to know how the cuts to Medicaid and Medicare which occurred in the uh big beautiful bill disproportionately harm territories including the Virgin Islands that lack charitable care structures that we've heard in some of these other tax exempt hospitals provided in the mainland. Um I was wondering if Mr. Hild you could um tell me a little bit about that.
▶ 1:57:59Um, well, I would just say that I I certainly agree with you that we don't want our hospitals uh distracted, which is part of the reason that we do think it's important to look at these nonprofit hospitals when they're focusing on someone other than the provision of healthcare. And while I understand you characterized some of this is sort of a
▶ 1:58:14side I asked my question was how do you think the Medicaid and Medicare cuts are going to affect I
▶ 1:58:20I'm not a economist expert on on those
▶ 1:58:23Dr. Horowitz, are you able to tell us how that may affect um hospitals? I think any cuts in Medicaid reimbursement and Medicaid coverage are going to make it harder for hospitals to provide care to the people who need it.
▶ 1:58:36And how is that going to why would that be? Because many people, my constituents, when I tell them about the Medicaid cuts, they may say, "I'm not on Medicaid, so how does that affect me?"
▶ 1:58:47How would it affect someone who's not on Medicaid in terms of hospital care?
▶ 1:58:51Because hospitals have to make up the money somewhere. And so they might do it by providing more profitable services that are not necessarily needed, driving up prices in other areas and um and ending up having to have you more crowded emergency rooms when people who are desperate come because they don't have any coverage at all.
▶ 1:59:11Thank you for that and I yield back.
▶ 1:59:14Thank you. Um we're going to do a quick fire drill here because the fact matter we're down to two minutes 14 seconds on the floor vote. Um um Dr. B um I've read your stuff because you you did a paper was it two years ago? Um on this um Dr. Wley I I've just read your testimony but I'd like to actually read some papers. Dr. Herwitz, here's my problem.
▶ 1:59:43We're up here trying to understand something we're not experts in and you're saying different things. I would love to actually line up my math and understand because for all of us here we have a small problem. Um seven years from now the Medicare trust fund is empty.
▶ 2:00:05Um we calculate that means in 2033 the first full year the shortfall will be about 140 billion and every year after that it's going up 3040 billion dollars. the scale of what's going on. But you heard it here and and there's going to be a point I'm trying to make. My Democrat colleagues, even my Republican colleagues, we treat health care as a It's a great sin.
▶ 2:00:34Is healthcare finance or is health care the cost of actually delivering a service? I would argue that the barriers we have built into technology, the barriers, the incentives are misaligned, the information, other things we use. Um, look at the problems we have with EMR systems and everything else.
▶ 2:00:57And maybe we need a fixation on how we change the actual cost of delivering health care instead of a constant debate of how are we going to healthcare. Um the discussion on nonprofit hospitals. I am going to send you all what we call QFRS some questions.
▶ 2:01:22We've had a running discussion on redesigning the 990 form just so you as professors, you you as researchers actually have better quality and we as policy makers know what the hell we're talking about. Um, is a billboard should that qualify as a community good, a stadium, or is it dealing with uncompensated care? You know, some of the questions should be obvious. the 990 forms.
▶ 2:01:52Actually, if you've ever sat and read samples of them, let's be have a moment of honesty. Um, the IRS is supposed to be auditing these things like every three or four years, what would you audit? The the the quality of the information is just not there. For those in the nonprofit hospital space, help us. I've asked this before and I've gotten zero.
▶ 2:02:19Well, Banner in Phoenix has been wonderful in sending me information and helping, but that's functionally my only one who's been saying, "Here's some ideas. Here's some ways we could actually build data sets for you. We could report it. We already have this because we already they have to do some of that for certain state regs. Help us build another way the IRS can collect data so we as policy makers on the ways and means know the value of tax exempt status and that we're truly meeting the community good standards." Simple enough.
▶ 2:02:48And with that, I'm going to adjourn the committee, but do be prepared for some questions sent to you. And you can be fairly robust. Um, I'm blessed to have some people much smarter than I am on staff who are capable of reading complexity and maybe we can actually next time we do this hearing actually have it be a hearing of here's our solutions. What do you think? So with that, I would like to thank our witnesses for appearing before us today.
▶ 2:03:15Please be advised that members have two weeks to submit questions to be answered later in writing. Those questions and your answers will be made part of the formal record. And with that, we race across the street to go vote.
▶ 2:03:29Thanks, Mr. Chairman.