Big Nonprofit Hospitals Expand in Wealthier Areas, Shun Poorer Ones

Many of the nation's largest nonprofit hospital systems, which give aid to poorer communities to earn tax breaks, have been leaving those areas and moving into wealthier ones as they have added and shed hospitals in the last two decades. From a report: As nonprofits, these regional and national giants reap $8.8 billion from tax breaks annually, by one Johns Hopkins University researcher's estimate. Among their obligations, they are expected to provide free medical care to those least able to afford it. Many top nonprofits, however, avoid communities where more people are likely to need that aid, according to a Wall Street Journal analysis of nearly 470 transactions. As these systems grew, many were more likely to divest or close hospitals in low-income communities than to add them. Since 2001, half the hospitals divested by CommonSpirit Health, a large Catholic system based in Chicago, were in communities where the poverty rate was above the medians for state hospital markets, compared with 30% of those it added. At Bon Secours Mercy Health, formed by the 2018 merger of two growing regional nonprofits, about 42% of hospitals it divested were in areas with higher poverty, compared with 27% of hospitals it added. Of hospitals divested or closed by St. Louis-based Ascension, about half were located in higher-poverty areas, compared with 40% of the Catholic system's acquisitions. At the same time, many top nonprofits were moving more aggressively to add hospitals in more affluent areas. At Mercy, a St. Louis-based hospital nonprofit, 56% of new hospitals were in places with lower poverty rates, compared with 25% of those it shed. About two-thirds of the hospitals it added were in markets where the share of households with incomes of at least $200,000 was above the state median. That compared with 25% of those the system shed. Of hospitals acquired by Florida-based AdventHealth, nearly two-thirds were in low-poverty areas, compared with 40% of those they divested. And 59% had a larger share of higher-income households, compared with 40% of those they exited.

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