(The Center Square) – A new report says many of Indiana’s nonprofit hospitals are driving up health care costs while failing to provide sufficient charity care – despite receiving about $1.3 billion a year in tax subsidies.
The report comes from Peter Pitts, a former FDA associate commissioner, and the Center for Medicine in the Public Interest. It found that 66% of Indiana’s nonprofit hospitals spent less on community investment than the value of their tax breaks between 2020 and 2022.
That gap is known as a “fair share deficit,” according to the report.
In 2020, 42 Indiana hospitals had a combined fair share deficit of $477 million. The state’s largest system, Indiana University Health, had the fifth-largest fair share deficit in the country, $136 million, despite posting $781 million in net income.
The report says only 47% of community investment money went to actual charity care while top executives made millions. IU Health CEO Dennis Murphy made nearly $5 million in 2023. Other CEOs in the state made between $2.6 and $3 million.
Pitts criticized the hospitals for not living up to their mission.
“The high esteem in which Hoosiers hold … their healthcare institutions is being betrayed by many of Indiana’s not-for-profit hospitals who are putting profit before patients,” he told The Center Square via email. “For example, only 11% of Indiana hospitals are in compliance with federal transparency regulations and Indiana University Health has the dubious honor of owning the fifth largest fair share deficit in the United States: $136,000,000 – enough to erase 66,518 individual medical debts in Indiana.”
IU Health did not immediately respond to a request for comment.
The report also notes that Indiana hospitals tend to focus on high-reimbursement procedures for private insurance rather than serving Medicaid or uninsured patients. It also criticizes hospitals for lobbying against reforms and for failing to follow federal price transparency rules.
The report calls for stronger oversight of nonprofit hospitals. It recommends setting clear standards for charity care, tying tax exemptions to how much help hospitals provide to low-income patients, and making financial reporting more transparent. It also suggests capping executive pay, limiting lobbying activity, and requiring regular third-party audits to ensure compliance with nonprofit rules.
