Tax-exempt Hospitals Provided $149 Billion in Total Benefits to Their Communities

Every hospital and health system’s mission is to care for their patients and communities. They do this by providing a comprehensive range of benefits, programs and essential services — responsibilities they value and deliver every day of the year, no matter the conditions.

Tax-exempt hospitals annually report the comprehensive ways in which they benefit their communities. The data show that these hospitals provided $149 billion in total benefits to their communities in 2022 alone (the most recent year for which comprehensive data is available). This represents a nearly 50% increase in community benefit spending over five years, surpassing the 2017 level by $49 billion. A large portion of this — representing nearly 7% of not-for-profit hospitals’ total expenses or approximately $65 billion — was for financial assistance for patients in need, including absorbing underpayments from Medicaid and other government programs for the poor.

However, hospitals and health systems do much more to support their communities. They tailor programs aimed at keeping their communities healthy and productive, such as helping with health care coverage, healthy food, health education, health screenings, transportation, vaccination clinics and other programs. And on top of all of this, they invest in lifesaving research and medical innovation, train our next generation of health professionals and subsidize vital health services, such as burn and neonatal units, upon which we all rely.

Results from 2022 Tax-exempt Hospitals’ Schedule H Community Benefit Reports

Executive Summary

Improving the health of their communities is at the heart of every hospital’s mission.

Tax-exempt hospitals annually demonstrate accountability to the communities they serve by reporting to the Internal Revenue Service (IRS) on the benefits they provide to their community. The IRS collects this information using the Form 990 Schedule H and makes it publicly available. This report summarizes such community benefit information for the tax year 2022.*

Tax-exempt hospitals provide benefits to their communities in myriad ways, only some of which are captured on the IRS Form 990 Schedule H. First and foremost, they provide free and discounted care to individuals who would otherwise be unable to afford it. Based on 2024 data, this includes care for the approximately 9% of uninsured American adults and an additional 23% who are underinsured, meaning that they have coverage. Still, it exposes them to costs they must absorb. Hospitals also absorb underpayments from means-tested government programs to ensure that some of the most vulnerable individuals, including the elderly, disabled and low-income children, have access to care. This includes incurring substantial losses due to Medicare and Medicaid underpayments, as well as bad debt expenses for certain other low-income individuals.

In addition to financial benefits, hospitals offer programs and activities to support their communities. These include activities to:

This report presents the financial costs incurred by tax-exempt hospitals and health systems in providing community benefits. IRS requires such hospitals to report community benefit as a percent of hospital expenses. These numbers alone, however, do not measure the value of the overall tangible and intangible benefits hospitals provide by improving their communities’ health and economic well-being. Tax-exempt hospitals also provide the IRS descriptions of their community benefit programs as part of their filing, which begin to tell the hospital’s story beyond what can be learned from the financial information alone. They also engage in a regularly scheduled process, in conjunction with their communities, to develop a plan to tackle the greatest health and wellness needs, culminating in a formal Community Health Needs Assessment.

Methodology

Since 2012, the AHA, assisted by Ernst & Young (EY) LLP, has reviewed and analyzed Schedule H tax filings. In 2025, AHA contracted with RTI International to utilize the Community Benefit Insight dataset to create a file of all electronically submitted Schedule H forms for the most recently completed tax year (2022). Using the Schedule H community benefit data and total expense data from the 2022 AHA Annual Survey database, AHA calculated the percentage of total hospital expenses spent on benefits to the community.

Individual and Group Schedule Hs

Hospitals submit a Schedule H for a single hospital (individual Schedule) or as part of a combined Schedule that includes more than one hospital (group Schedule), depending on their organizational structure. The 2022 file contains 2,053 Schedules. Upon review, AHA identified 2,813 total hospitals in the Schedule H data file and matched these records with the AHA Annual Survey database.

Community Benefit Calculation

The community benefit expenses used for this report are those reported to the IRS, net of any offsetting revenue. Net community benefit expenditures were summed across hospitals and expressed as a percentage of the total hospital expenses reported by the same hospitals on the 2022 AHA Annual Survey. To improve reliability, employer identification numbers (EINs) with total community benefits as a percentage of total expenses falling outside two standard deviations from the mean — across all EINs and within single filers — were excluded. All reported aggregates reflect the analytic sample after outlier removal. For purposes of the IRS Form 990 Schedule H, the tax year is equivalent to the calendar year in which the reporting year begins (e.g., a fiscal year beginning Oct. 1, 2022, would report under tax year 2022, not under the fiscal year end of Sept. 30, 2023). There may be timing differences for tax year 2022 and AHA Survey and AHA membership database fiscal year reporting. The calculation of community benefits for exempt hospitals in aggregate includes all data from both individual Schedules and group Schedules. EY confirmed that “[t]he methodology described above is consistent with the approach used by EY in our prior analyses of the Form 990 Schedule H.”

Demographic Calculation

The calculation of community benefits based on demographic characteristics (e.g., hospital type, size) requires individual hospital community benefits information. Since a group Schedule does not specify the amount of community benefit expense attributed to individual hospitals, and the hospitals on a group Schedule may have very different demographic characteristics, comparison groups were developed using only the Schedule Hs filed for single hospitals (1,809). Although a significant portion of system-affiliated hospitals submitted a single-hospital Schedule H, the comparison data slightly underrepresents the community benefit expenditures of system-affiliated hospitals reporting as a group.

Schedule H Data

Data was extracted from the following sections of the 2022 990 Schedule H form.

• Part I on financial assistance and certain other community benefits.
• Part II on community-building activities.
• Part III on bad debt expense and Medicare.

See Appendix A for a detailed list of Schedule H data elements used in this report.

Hospital Segments

Results are presented for the following segments of hospitals.

• Size
• Location
• Type

See Appendix B for a detailed description of the comparison groups.

Results

Hospitals’ Total Benefits to the Community

In tax year 2022, exempt hospitals spent on average 15.1% of their total annual expense on benefits to the community. Benefits include financial assistance, Medicaid, and other means-tested government programs underpayments, community health improvement services, research, health professions education, subsidized services, certain bad debt expenses, Medicare shortfall, and other community benefits and building activities. These are the financial costs hospitals incurred in providing particular benefits to their community, but do not reflect all the tangible and intangible benefits of improving their communities’ health and well-being.

Table 2 shows the average percent of total expense corresponding to the Schedule H form.

• Part I on financial assistance and certain other community benefits.
• Part II on community-building activities.
• Part III on Medicare shortfall and bad debt expense.

Note: Percentages may not sum to the total percent due to rounding.

* Net shortfall (gross shortfall less surplus).

** A single hospital can be in more than one type category.

Hospitals’ Financial Assistance, Means-tested Programs and Certain Other Benefits

In addition to providing financial assistance and subsidizing Medicaid underpayments, hospitals fund community health improvement services, underwrite health professions education, fund health research, subsidize certain health services, and make cash and in-kind contributions for community benefit.

Table 3 shows the average percent of total expense corresponding to the types of community benefits reported on the Schedule H form, Part I. In 2022, financial assistance and unreimbursed costs from Medicaid and meanstested government programs were 6.6% of total tax-exempt hospital expenses. When combined with expenditures for health professions education, medical research, cash and in-kind contributions and other benefits, this value amounts to 11.0% of expenses in 2022.

Note: Percentages may not sum to the total percent due to rounding.

* The “Other” community benefit category includes both Community Health Improvement Services and Subsidized Health Services.

** A single hospital can be in more than one type category.

Bad Debt Expenses

In 2022, 38.5% of the 1,809 individual hospital Schedule Hs reported bad debt expense. Although the IRS provides minimal instructions on how to calculate this amount, the average bad debt expense reported was 0.2% of total expenses in 2022.

However, some patients, unable to pay for their medical care, do not complete hospitals’ financial assistance processes. Consequently, hospitals classify unreimbursed care for those patients as bad debt expense. Most hospitals and systems report that some portion of their bad debt expense would qualify as a benefit to the community as financial assistance due to the low income of the patients.

For example, the following is one hospital’s rationale for including bad debt amounts in community benefit:

• The portion of bad debt expense that reasonably could be attributable to patients who may qualify for financial assistance under the hospital’s charity care program (reported in Part III line 3) was calculated by applying the percentage of bad debts by zip code (for which the average household income for each zip code is less than 200% of the federal poverty level) to bad debt expense reported in Part III line 2. Since this portion of bad debt is attributable to patients residing in an area where the average income is less than 200% of the Federal poverty level, it is highly likely these patients would have qualified for the hospital’s charity care program had they applied. For this reason, we believe the amount should be treated as a community benefit expense in Part I.

Medicare Surplus and Shortfall

In 2022, 73.6% of participating hospitals and systems reported having Medicare shortfalls. Medicare reimbursement shortfalls occur when the federal government reimburses the hospitals less than their costs for treating Medicare patients.

Most hospitals described why their Medicare shortfall should be treated as a community benefit.

• Non-negotiable Medicare rates are sometimes out of line with the true costs of treating Medicare patients.
• By continuing to treat patients eligible for Medicare, hospitals alleviate the federal government’s burden for directly providing medical services. The IRS has acknowledged that lessening the government burden associated with providing Medicare benefits is a charitable purpose.
• Rul. 69-545 states that if a hospital serves patients with government health benefits, including Medicare, then this is an indication that the hospital operates to promote the health of the community — a tax-exempt purpose.

Community Building Activities

In 2022, hospital systems and individual hospitals spent on average 0.05% of their total expenses on community building activities. Community-building activities take many forms:

• Hospital employees report participating in the state Board of Health, regional health department activities and neighborhood community relations committees, and with university and other school partnerships.
• Environmental improvements.
• Workforce and job development.

These activities often promote community regional health by offering direct and indirect support to communities with unmet health needs. These include patients who are indigent, uninsured, underprovided for, or geographically isolated from health care facilities.

Conclusion

Hospitals provide benefits to the communities they serve in a multitude of ways. They not only provide financial assistance and absorb underpayments by Medicaid and other means-tested government programs, but they also absorb losses due to unreimbursed Medicare and bad debt expense. In addition, they offer programs and activities to improve community health, underwrite medical research and health professions education, and subsidize high-cost health services.

Follow-up

Questions about this report can be addressed to help@aha.org.

Appendix A

Schedule H Data Elements

Financial Assistance and Certain Other Benefits

Sum of the following

• Financial assistance and means-tested government programs: Part I, line 7d(e)
• Community health improvement services: Part I, line 7e(e)
• Health professions education: Part I, line 7f(e)
• Subsidized health services: Part I, line 7g(e)
• Medical research: Part I, line 7h(e)
• Cash and in-kind contributions to community groups: Part I, line 7i(e)

Community Building Activities

Part II, line 10[e]

Medicare Shortfall

Part III, Section B, line 7

Bad Debt Expense

Part III, Section A, 3

Total Benefits to Community

Sum of [Financial Assistance and Certain Other Benefits]+[Community Building Activities]+[Medicare Shortfall]+[Bad Debt Expense]

Appendix B

Demographic Definitions and Data Source

Size

Definition

Categories based on total hospital expenses.

• Small” is less than $100 million.
• “Medium” is $100-$299 million.
• “Large” is $300 million or more.

Source: AHA 2022 Annual Survey

Location

Definition

Categories are based on core-based statistical areas (CBSA). A CBSA is a U.S. geographic area defined by the Office of Management and Budget that consists of one or more counties (or equivalents) anchored by an urban center of at least 10,000 people, plus adjacent counties that are socioeconomically tied to the urban center by commuting. Hospitals located in a CBSA are categorized as “Urban/Suburban.” Hospitals not located in a CBSA are categorized as “Rural.”

Source: U.S. Census

Type

Critical Access Hospital

Definition

A critical access hospital (CAH) is a hospital designated as a CAH by a state that has established a State Medicare Rural Hospital Flexibility Program in accordance with Medicare rules.

Source: The national CAH database is maintained by a consortium of the Rural Health Research Centers at the Universities of Minnesota, North Carolina-Chapel Hill, and Southern Maine, and funded by the Federal Office of Rural Health Policy. The list contains the most current information and is updated regularly based on CMS reports, information provided by state Flex Coordinators, and data collected by the NC Rural Health Research Program on hospital closures.

General Medical Hospital

Definition

A general medical hospital is a hospital primarily engaged in providing diagnostic and medical treatment (both surgical and nonsurgical) to inpatients with a wide variety of medical conditions, and that may provide outpatient, anatomical pathology, diagnostic X-ray, clinical laboratory, operating room and pharmacy services.

Source: AHA 2022 Annual Survey

Children’s Hospital

Definition

A children’s hospital is a center for the provision of health care to children, and includes independent acute care children’s hospitals, children’s hospitals within larger medical centers, and independent children’s specialty and rehabilitation hospitals.

Source: AHA 2022 Annual Survey

Teaching Hospital

Definition

A teaching hospital is a hospital that provides training to medical students, interns, residents, fellows, nurses, or other health professionals and providers, provided that such educational programs are accredited by the appropriate national accrediting body.

Source: AHA Membership Database. To be identified as a teaching hospital, the hospital site must meet at least one of the following criteria: be recognized for one or more Accreditation Council for Graduate Medical Education accredited programs; have a medical school affiliation reported to the American Medical Association; be a Council of Teaching Hospitals member; have internships approved by the American Osteopathic Association (AOA); or have residencies approved by AOA.

System Affiliation

Definition

A hospital is considered “affiliated” if it is owned, leased or managed by a health care system. Unaffiliated hospitals are called “independent” or “stand-alone.”

Source: AHA Membership Database

*Tax year for which the most recent comprehensive filed information is available.