Marylanders are told that nonprofit hospitals exist to serve the public good. In exchange for generous tax breaks, public subsidies, and charitable donations, these institutions are supposed to provide affordable care, charity treatment, and meaningful investments in community health.
The evidence, however, tells a different story. Across Maryland, and the nation, many nonprofit hospitals now operate less like charities and more like aggressive, highly protected corporations. They maximize revenue, minimize obligations to the poor, and leave taxpayers to make up the difference. That disconnect is helping drive higher health care costs and widening inequities in who gets care.
Nonprofit hospitals enjoy enormous public benefits: exemption from federal, state, and local taxes; access to tax-free bond financing; and billions in government payments. In return, they are supposed to deliver charity care and community benefits that justify those privileges.
Nationally, however, nearly 80 percent of nonprofit hospitals spend less on community benefit than the value of their tax breaks, creating what researchers call a $25.7 billion “fair share deficit.” Maryland performs better than the national average, but not well enough to keep taxpayers at ease. According to the Lown Institute, 18% of Maryland’s nonprofit hospitals still fail to give back as much as they receive.
One striking example: In 2022, at the height of the COVID-19 crisis, University of Maryland Medical Center ran a $42 million fair-share deficit—receiving more in public subsidies than it spent on meaningful community investment. That is not charity. It is a tax scam.
Even more troubling, many Maryland hospitals are actively pulling away from the very patients they were created to serve. Medicaid and uninsured patients are increasingly avoided because they are less profitable than privately insured patients. Hospitals instead prioritize elective procedures, specialty services, and facility expansions that attract higher-paying insurers.
Some hospitals have even been documented suing low-income patients for medical debt, including people who may have qualified for free or discounted care. Johns Hopkins Health System was publicly criticized for aggressive debt collection practices that resulted in wage garnishments and liens against vulnerable patients. That behavior that is indistinguishable from that of a for-profit debt collector.
This is happening because neither federal nor Maryland law clearly requires hospitals to provide a minimum level of charity care in exchange for tax exemption. As the Johns Hopkins Bloomberg School of Public Health has noted, the result is a system riddled with loopholes and wide variations in what hospitals contribute to the communities that support them.
If hospitals are not spending their money on charity, where is the money going? Increasingly, it is going to expansion projects, market consolidation, and real estate speculation. Hospitals pour billions into new buildings, acquisitions, and advertising designed to boost market share and negotiating power over competitors in the healthcare space, not access to care.
In Baltimore, for example, nonprofit hospitals have agreed to contribute $6 million annually to the city—but they consume an estimated $47 million in city services, leaving taxpayers to fill a $41 million gap. Again, that is a tax scam masquerading as community benefit.
This model has real consequences. First, it erodes public trust. When “nonprofit” hospitals behave like Wall Street firms, the public is rightly skeptical of their charitable claims. Second, it restricts access to care. Low-income patients face longer waits, fewer service options, and greater financial risk because hospitals systematically favor wealthier patients. Third, it undermines health policy. Taxpayers are effectively subsidizing institutions that are not meeting their obligations while health care costs continue to rise.
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