Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
The ultimate mission of all hospitals and health systems, regardless of size and type of ownership, is to care for their patients and communities.
That’s why Indiana’s hospitals are more than just places of healing—they are our community anchors, mission-driven institutions that invest in the health and well-being of Hoosiers far beyond the bedside.
Yet recent media attention and discussions in Washington, D.C., have questioned whether nonprofit hospitals are doing enough to fulfill their charitable purpose, particularly when it comes to providing charity care and community benefit. These narratives miss the broader picture: Nonprofit hospitals deliver vital community services that we all risk losing if their nonprofit status is jeopardized.
Let’s imagine that for a moment. What exactly would Indiana communities lose?
First and foremost, the significant and essential safety net for those in need would fray. In 2022 alone, Indiana’s nonprofit hospitals provided $1.8 billion in uncompensated and discounted care. That includes financial assistance for uninsured patients, reduced-cost care for those in coverage gaps and the losses hospitals absorb because government reimbursements—specifically, Medicare and Medicaid—fall way short of the actual cost of care. It also includes write-offs when patients don’t pay their bills, which are estimated to make up more than 1% of hospital expenses in Indiana each year. This level of commitment represents a lifeline for hundreds of thousands of Hoosiers and exceeds national averages.
If hospitals were to lose their nonprofit status, this significant commitment to the community at large could be dramatically scaled back or eliminated altogether.
If we want to talk about charity care, we must ask: What does that really mean? It’s not just free health care services. It’s a comprehensive approach to making that care more accessible. It’s the work hospitals do 24 hours a day, 7 days a week to ensure patients aren’t turned away, even when the majority of a hospital’s reimbursement doesn’t cover the actual cost of care. It’s the investment in services that may never breakeven but are essential to a community’s health.
One of the most compelling indicators of this commitment is the scale of community benefit programs. According to a recent report by Ernst & Young, Indiana’s nonprofit hospitals provided $3.9 billion in total benefits to their communities in 2022—nearly 2.5 times the value of their tax exemptions.
Second, Indiana’s rural and underserved areas would face even greater challenges if their local hospital lost its nonprofit status. Nonprofit hospitals often invest in essential services like OB-GYN care, behavioral health and emergency medicine—services that are very costly to provide but are critical to every community. These essential services are often provided at a loss but are part of a hospital’s community benefit outside direct charity care. They also provide programs tailored to specific local needs, like chronic disease prevention, nutrition education, transportation support for seniors and health screenings.
Third, the ripple effects would extend to education and workforce development. Nonprofit hospitals invest heavily in training the next generation of health professionals—nurses, doctors, technicians—through residency programs, scholarships and continuing education. These investments strengthen Indiana’s health care workforce and help address shortages in key areas. Without the financial flexibility and mission-driven focus of nonprofit hospitals, these programs could be scaled back, jeopardizing the pipeline of talent our future workforce depends on.
Finally, the financial stability of hospitals themselves would be compromised. Tax-exempt status helps nonprofit hospitals with tight finances maintain sustainable margins to continue providing access to care. These margins enable investments in facilities, technology, and workforce development—critical components of a strong health care ecosystem. Their financial health supports favorable bond ratings, which are essential for borrowing funds to upgrade infrastructure.
Contrary to some reports suggesting that nonprofit hospitals are overly profitable, audited financial statements submitted to the IRS show that many Indiana hospitals are in fact operating at a loss. In 2023, the state’s five largest hospital systems posted an average operating margin of -1.1% while the statewide average hospital operating margin was 0.9% — well below the national average of 2.3% for the same year. Despite these financial headwinds, Indiana hospitals continue to invest generously in their communities, demonstrating a steadfast commitment to their nonprofit mission and our Hoosier state.
As policymakers consider the future of nonprofit health care in Indiana, we must all urge them to consider the lives touched, the programs sustained and the communities strengthened by nonprofit hospitals. The question isn’t whether these institutions are doing enough—it’s whether we can afford to live without them.•
__________
Tittle is president of the Indiana Hospital Association.
Please enable JavaScript to view this content.