U.S. Nonprofit Hospital Charity Care:
2023 Benchmarks

Nonprofit hospitals are required to file Schedule H of IRS Form 990, disclosing their community benefit activities — the primary justification for their tax-exempt status. In tax year 2023, 1,819 nonprofit hospital organizations operating 3,022 facilities reported a combined $278.8 billion in community benefit, with a median of 7% of total costs.

But the headline figure masks significant variation. The median hospital reports $33.3 million in community benefit, while the 25th percentile is just $9.2 million and the 75th percentile reaches $109.9 million. Community benefit as a share of costs ranges from 4% at the 25th percentile to 12% at the 75th — a 3x gap that raises questions about which hospitals are truly earning their exemptions.

The composition of community benefit is often surprising. Direct charity care — free or discounted care for patients who qualify under a hospital's financial assistance policy — accounts for just 6.2% of total community benefit ($17.3 billion). The dominant category is unreimbursed Medicaid at 62.2% ($173.4 billion), representing the gap between what Medicaid pays and what care actually costs hospitals.

Hospitals with $1B-$5B in revenue report the highest median community benefit at 9% of costs, while both the smallest (under $50M, 5%) and the very largest ($5B+, 7%) report lower rates. This pattern likely reflects that mid-size systems are large enough to have significant Medicaid patient volumes but not so large that their total cost base dilutes the percentage.

In absolute terms, the scaling is dramatic: the median hospital under $50M reports $5.1M in community benefit, while the median $5B+ system reports $1.7 billion — a 340x difference. The 39 largest systems alone account for $81.1 billion, or 29% of all community benefit from just 2% of filers.

State-level community benefit percentages range from 2% (Kentucky, North Dakota) to 13% (Tennessee, New York). High-benefit states tend to have large academic medical centers, robust Medicaid programs, and hospitals with significant research and education missions — all of which count toward community benefit.

States with the lowest community benefit rates overlap significantly with states reporting the highest bad debt ratios. South Carolina, for instance, has a median community benefit of 4% but a median bad debt ratio of 10.1% of expenses — suggesting that uncompensated care in these states takes the form of unpaid bills rather than proactive charity care programs.

In addition to the $278.8 billion in community benefit, nonprofit hospitals reported $22.6 billion in bad debt — patient accounts receivable deemed uncollectable. Bad debt is not counted as community benefit under IRS rules, but it represents a real financial burden. The median hospital reports $2.5 million in bad debt, or 2.1% of total expenses.

The IRS requires tax-exempt hospitals to maintain a written financial assistance policy (FAP) outlining eligibility for free or discounted care. Among 2023 Schedule H filers, 99.3% report having such a policy — effectively universal. However, a policy's existence says nothing about its generosity. The wide variation in charity care spending ($152K median for hospitals under $50M vs. $92.4M for the largest systems) suggests enormous differences in how policies are implemented.

Hospital CEOs earn significantly more than their counterparts at non-hospital nonprofits. Among 685 hospital CEOs with reported compensation in 2023, the median total compensation was $686,723 — with the 75th percentile reaching $1.56 million. These figures are roughly double the median nonprofit CEO salary across all sectors, reflecting the scale, complexity, and regulatory burden of hospital management.