American healthcare was a sacred trust for generations past. My physician grandfather would treat any patient, never charging more than they could afford. But today, look behind the curtain at some of our most prominent tax-exempt hospital systems, and you find a giant corporation using our money in absurd and insulting ways.
These institutions claim to be “nonprofit” and present themselves as pillars of the community. They benefit from massive taxpayer subsidies and tax breaks in the name of the public good. Yet, a pattern of behavior at giants like the NewYork-Presbyterian Hospital system suggests that these taxpayer-funded benefits really subsidize the lavish lifestyles of executives even as patients suffer.
This is a systemic prioritization of executive enrichment, high-society luxury, and complex financial schemes over the supposed core mission to heal the sick.
The sheer scale of the tax-exempt benefit these hospitals enjoy is staggering. At a recent congressional hearing, House Ways and Means Committee Chairman Jason Smith pointed out to hospital executives, including the CEO of NewYork-Presbyterian, that these institutions consistently deliver charity care that is worth significantly less than the value of their massive tax breaks. Across the country, nonprofit hospitals get about $28 billion in tax breaks annually, yet provide only about $16 billion of charity care.
So where does the money go? It fuels a culture of institutional extravagance that has nothing to do with medicine. Real estate vanity projects, world-class art collections, luxurious overseas facilities, massive executive salaries—all are supported by money saved through tax exemptions.
A shining example of this offensive dynamic is NewYork-Presbyterian, featured in our latest “Healthcare Betrayal” ad campaign that exposes their misguided priorities. While everyday families struggle with skyrocketing medical costs, this hospital corporation has shamelessly probed the extremes of executive compensation. Records show that former CEO Steven Corwin saw his pay jump from a modest $8.9 million to a mind-boggling $23 million in just two years. Shortly after this obscene pay hike, the hospital slashed nearly 1,000 employees citing financial challenges. This sequence of events demands a reckoning, especially when taxpayer money is involved.
Tax exemptions are just the beginning. Other federal programs grant hospitals windfall revenues without requiring them to pass the benefit on to patients. One of these is the 340B drug pricing program, which began as a safety net providing steep discounts on prescription drugs for low-income patients. As Chairman Smith pointed out at the recent hearing, large hospital systems today mostly keep the discounts for themselves instead of passing what amounts to billions of dollars in savings.
NewYork-Presbyterian has seen its revenue from this federal program spike by a staggering 880% in recent years. Apparently that’s not enough, so the Manhattan-based corporation also claims to be a rural hospital in order to get a dual-designation that lets it benefit from federal funds intended for rural communities. Despite all these federal programs, tax benefits, and subsidies, charity care makes up only 1% of the system’s operating costs. Maybe it could spend more if not tied up in a jaw-dropping $750 million settlement regarding sexual abuse claims from patients.
The Department of Justice is also pursuing NewYork-Presbyterian for anticompetitive practices, accusing the corporation of using its market power to “preclude insurers and employers from offering New Yorkers budget-conscious health insurance plans.”
The recent hearing with hospital executives was a good start, but Congress needs to redouble oversight of these massive, subsidized corporations. The American people—both taxpayers and patients—deserve transparency and accountability. We must demand that hospitals receiving benefits prioritize patients over executive wealth, corporate luxury, and other dubious financial maneuvers. Those who benefit from the public trust must be held to a standard that justifies the support they receive, or they should lose their privileges. The waste and abuse are clear to see, and the time for reform is now.
