¹ See, e.g., Comm. for a Responsible Fed. Budget, The Federal Tax Benefits for Nonprofit Hospitals 1, 7 (2024), https://www.crfb.org/papers/federal-tax-benefits-nonprofit-hospitals [https://perma.cc/U8JY-59HW] (proposing the “reform or repeal” of nonprofit hospital exemption based on failure “to meet community benefits obligations under all but the broadest (many argue, overly expansive) definitions”); Rick Pollack, An Irresponsible Take on Nonprofit Hospitals’ Value to Patients and Communities, Am. Hosp. Ass’n (June 13, 2024, 4:29 PM), https://www.aha.org/news/blog/2024-06-13-irresponsible-take-nonprofit-hospitals-value-patients-and-communities [https://perma.cc/CR6X-S6DX] (responding to Committee for a Responsible Federal Budget’s report). In October 2023, Senator Bernie Sanders and the Committee on Health, Education, Labor and Pensions (HELP Committee) published a majority Staff Report arguing that the “failure [of tax-exempt hospitals] to provide much needed care in the midst of an ongoing crisis of affordability in medical care should not be tolerated by the United States Congress.” Staff of S. Comm. on Health, Educ., Lab., & Pensions, 118th Cong., Rep. on Executive Charity: Major Non-Profit Hospitals Take Advantage of Tax Breaks and Prioritize CEO Pay Over Helping Patients Afford Medical Care 2 (Comm. Print 2023). On the same day, the American Hospital Association responded to the Senate report with its own report, providing data from 2020 and arguing that “[t]hese 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.” Am. Hosp. Ass’n, Tax-exempt Hospitals provided Nearly $130 Billion in Total Benefits to Their Communities 2 (2023), https://www.aha.org/system/files/media/file/2023/10/Results-from-2020-Tax-Exempt-Hospitals-Schedule-H-Community-Benefit-Reports.pdf.

² Edward A. Zelinsky, The Commerciality of Non-Profit Hospitals Requires Them to be Taxed: Bringing the Debate to a Conclusion, 42 Va. Tax Rev. 401, 471 (2023).

³ See, e.g., Sarah Boden, CEOs Earn Big Bucks at Nonprofit Hospitals. But Does That Benefit Patients?, NPR: Shots – Health News (Aug. 19, 2024 5:00 AM ET), https://www.npr.org/sections/shots-health-news/2024/08/19/nx-s1-5078495/nonprofit-hospitals-ceo-compensation-community-benefit-uninsured-mission-tax-exempt-management; Amol S. Navathe, Why Are Nonprofit Hospitals Focused More on Dollars Than Patients?, N.Y. Times (Nov. 30, 2023), https://www.nytimes.com/2023/11/30/opinion/hospitals-nonprofit-community.html; Anna Wilde Mathews et al., Big Hospitals Provide Skimpy Charity Care—Despite Billions in Tax Breaks, Wall St. J. (July 25, 2022, 10:26 AM ET), https://www.wsj.com/articles/nonprofit-hospitals-vs-for-profit-charity-care-spending-11657936777; Letter from Sens. Elizabeth Warren et al., U.S. Senate, to Daniel Werfel, Comm’r, Internal Revenue Serv., and Edward T. Killen, Comm’r of Tax Exempt & Gov’t Entities Div., Internal Revenue Serv. (Aug. 7, 2023), https://www.cassidy.senate.gov/wp-content/uploads/media/doc/warren_letter.pdf (bipartisan letter describing alarm at “reports that despite their tax-exempt status, certain nonprofit hospitals may be taking advantage of this overly broad definition of ‘community benefit’ and engaging in practices that are not in the best interest of the patient” and asking for information about the Department of Treasury and Internal Revenue Service oversight of tax-exempt hospitals). Recently, Professor Philip Hackney argued that hospitals should lose charitable exemption, in part, to alleviate the burden on the Service as the primary regulator of charitable activities. See Philip Hackney, Keep Charitable Oversight in the IRS, 15 Colum. J. Tax L. 130, 184–86 (2024).

⁴ See infra Part I.B.

⁵ See, e.g., Derek Jenkins & Vivian Ho, Nonprofit Hospitals: Profits and Cash Reserves Grow, Charity Care Does Not, 42 Health Affs. 866, 868–69 (2023) (noting that while increases in profits at nonprofit hospitals did not correspond with increases in charity care spending, similar profit increases did result in charity care increases at for-profit hospitals); Ge Bai & Gerard F. Anderson, A More Detailed Understanding of Factors Associated with Hospital Profitability, 35 Health Affs. 889, 895 (2016) (describing that in a study of approximately 2993 hospitals, “seven of the ten most profitable hospitals are nonprofit”); The Tax-Exempt Hospital Sector: Hearing Before the H. Comm. on Ways & Means, 109th Cong. 9 (2005) (statement of Mark Everson, Comm’r, Internal Revenue Serv.) (noting the “convergence of practices between the for-profit and nonprofit hospital sectors, rendering it increasingly difficult to differentiate for-profit and not-for-profit health care providers”); John D. Colombo, The Failure of Community Benefit, 15 Health Matrix 29, 44–51 (2005) (“In general, independent reviews of the existing literature on the behavioral differences of nonprofit and for-profit hospitals find the studies at best inconclusive regarding whether nonprofit hospitals provide more socially-beneficial behavior in the form of better care, cheaper-but-equally-as-good care, or more charity care.”). Despite the length and span of time of the sources just cited, many other scholars and policy makers have identified ways in which nonprofit hospitals operate differently from for-profit hospitals. See, e.g., Susannah Camic Tahk, Tax-Exempt Hospitals and Their Communities, 6 Colum. J. Tax L. 33, 51–52 (2015) (citing scholars in various fields who found that “tax-exempt hospitals did in fact provide more community benefits than their for-profit counterparts.”); Erin C. Fuse Brown, Fair Hospital Prices are Not Charity: Decoupling Hospital Pricing and Collection Rules from Tax Status, 53 U. Louisville L. Rev. 509, 543 (2016) (describing a review of the availability of financial assistance policies on the websites of 140 hospitals in 14 states prior to the finalization of the I.R.C. 501(r) regulations and concluding that for-profit hospitals were more likely to “obfuscate their ownership status and the availability and nature of their financial assistance policies.”); Jill R. Horwitz, Why We Need the Independent Sector: The Behavior, Law and Ethics of Not-For-Profit Hospitals, 50 UCLA L. Rev. 1345, 1367 (2003) (concluding that not-for-profit hospitals provide more unprofitable services than for-profit hospitals); David A. Hyman & William M. Sage, Subsidizing Health Care Providers Through the Tax Code: Status or Conduct?, 25 Health Affs. W312, W312–15 (2006) (describing differences between nonprofit and for-profit hospitals and nursing homes identified by Mark Schlesinger and Brad Gray in How Nonprofits Matter in American Medicine, and What to Do About It, 25 Health Affs. W287, W287–303 (2006)).

⁶ The scholarship in this area includes a multitude of alternatives to the status quo or the seemingly draconian blanket revocation of exemption. A sampling of these alternatives include: Fuse Brown, supra note 5, at 549–56 (proposing that requiring Medicare participating hospitals to limit charges for uninsured and self-pay patients would address inequity of affordability and availability of charity care at tax-exempt and for-profit hospitals); Nina J. Crimm, Evolutionary Forces: Changes in For-Profit and Not-For-Profit Health Care Delivery Structures: A Regeneration of Tax Exemption Standards, 37 B.C. L. Rev. 1, 103–10 (1995) (proposing a “new tax scheme [that] would grant some form of tax-favored treatment to for-profit and not-for-profit health care organizations that engage in the types of charitable activities and programs society views as valuable and worthy of governmental subsidy through tax relief”); John D. Colombo, The Role of Access in Charitable Tax Exemption, 82 Wash. U. L.Q. 343, 371–72 (2004) (describing how exemption might be limited to those organizations that can show they have a specific, board-approved plan to “enhance[] access either by providing general services … to previously underserved populations,” or by providing “services to the general population that [are not already] provided by for-profit entities” and that they are in fact “doing more to enhance access than [their] for-profit counterparts”); Hyman & Sage, supra note 5, at W314–15 (proposing subsidies to tax-exempt or taxable entities that provide specified community benefits); Jessica Berg, Putting the Community Back into the “Community Benefit” Standard, 44 Ga. L. Rev. 375, 390–402 (2010) (proposing an increased emphasis and encouragement of population health as the standard for exemption rather than individual charity care); Rachel Weisblatt, Uncharitable Hospitals: Why the IRS Needs Intermediate Sanctions to Regulate Tax-Exempt Hospitals, 55 B.C. L. Rev. 687, 708–17 (2014) (proposing the introduction of intermediate sanctions to allow for more effective oversight of existing community benefit requirements); Camic Tahk, supra note 5 , at 81–85 (discussing possible redefinitions of “community” under the community benefit standard to include relevant disadvantaged groups or to impose a broad geographic understanding).

⁷ See, e.g., Evelyn Brody, Charities in Tax Reform: Threats to Subsidies Overt and Covert, 66 Tenn. L. Rev. 687, 692–93, 723 (1999) (“[T]he commerciality logic might require simply revoking the exemption of nonprofit hospitals.”); Henry Hansmann, The Rationale for Exempting Nonprofit Organizations from Corporate Income Tax, 91 Yale L.J. 54, 89 (1981) (“[I]t is not at all clear that there is justification for the relatively recent decision to exempt nonprofit hospitals from taxation even if they provide no research, teaching or subsidized care for indigents; that is, even if they are operated as strictly commercial nonprofits.”); George A. Nation III, Non-Profit Charitable Tax-Exempt Hospitals – Wolves in Sheep’s Clothing: To Increase Fairness and Enhance Competition in Health Care All Hospitals Should Be For-Profit and Taxable, 42 Rutgers L.J. 141, 155, 206 (2010) (arguing that because tax-exempt hospitals “are too dependent on the government for their tax exemption and not responsive enough to individual patients,” only those facilities that “provide service free to all patients with no expectation of or request for payment” should be “considered charitable and this tax-exempt”).

⁸ The approach suggested in this article does not negate the importance of other state or federal policies that hold all hospitals responsible for certain community-focused activities or the importance of engaging all hospitals in broader efforts to improve health outcomes through integration of individual health care and public health initiatives. The suggested approach could shift the burden from federal tax authorities to regulators with potentially more community and public health acumen to impose such obligations. See Daniel M. Fox & Daniel C. Schaffer, Tax Administration as Health Policy: Hospitals, the Internal Revenue Service, and the Courts, 16 J. Health Pol. Pol’y & L. 251, 252, 266–67 (1991) (arguing that in issuing Revenue Ruling 69-545 and establishing the community benefit standard for exemption, the Service was unknowingly making health policy); Mary Crossley, Health and Taxes: Hospitals, Community Health and the IRS, 16 Yale J. Health Pol’y L. & Ethics 51, 89–90 (2016) (describing historic skepticism of Service’s expertise “as an agency whose primary focus is collecting revenue…that cannot be expected to bring a deep level of expertise or understanding…to help accomplish community health goals”). The possible allowance of uniformly imposed state Medicaid provider taxes or user fees provides an example of how all hospitals, exempt and non-exempt, could contribute to state efforts to address “social determinants of health as provided by entities and persons other than [those] hospitals.” Jennifer L. Herbst et al., Hospital Taxes, Medicaid Supplemental Payments, and State Budgets, 40 J. Legal Med. 135, 154; see also id. at 156–59 (2020) (describing challenge to Connecticut’s use of a hospital provider tax to both leverage available federal funding and address broader state level budget deficits); Henry J. Kaiser Fam. Found., Fact Sheet: States and Medicaid Provider Taxes or Fees (2017), https://files.kff.org/attachment/fact-sheet-medicaid-provider-taxesfees-an-update.

⁹ See, e.g., Internal Revenue Serv., IRS Exempt Organizations Hospital Study Executive Summary of Final Report 3–5 (2009) (describing the Service’s plan to continue analyzing use of for-profit comparables in executive compensation reasonableness analyses); Daniel G. Bird & Eric J. Maier, Wayward Samaritans: “Nonprofit” Hospitals and Their Tax-Exempt Status, 85 U. Pitt. L. Rev. 81, 139–44 (2023) (proposing revisions to the tax code to facilitate more rigorous Service monitoring of hospital community benefits).

¹⁰ Strengthening the role of the community, vis-à-vis donors, in prioritizing charitable health care initiatives is consistent with the perspective that the nonprofit sector serves a social good by promoting “the value of freedom and pluralism.” See Lester M. Salamon, America’s Nonprofit Sector: A Primer 11–15 (2d ed. 1999) (summarizing rationales for exemption that include pluralism and solidarity as non-financial or -market-based rationales for tax-exemption).

¹¹ Fast Facts on U.S. Hospitals, 2024, Am. Hosp. Ass’n, https://www.aha.org/statistics/fast-facts-us-hospitals [] (last visited Dec. 31, 2024) (estimating that in 2022, there were 2,987 “Nongovernment Not-For-Profit Community Hospitals” in the United States).

¹² To qualify for exemption, in addition to being organized and operated for charitable purposes, an exempt hospital must ensure that no part of its net earnings inure to the benefit of private shareholders or individuals, that lobbying does not constitute a substantial part of its activities, and that it does not engage in political campaign activity. 26 U.S.C. § 501(c)(3).

¹³ See Hossein Zare et al., Comparing the Value of Community Benefit and Tax-Exemption in Non-Profit Hospitals, 57 Health Servs. Rsch. 270, 279–81 (2022) (describing characteristics of exempt hospitals that make them more likely to provide community benefits of a value greater than their tax-exemption, including having residents, more physicians with privileges, a greater portion of Medicaid patients, or being located in areas of low competition, in a Medicaid expansion state, or in communities with a higher percentage of White non-Hispanics).

¹⁴ See, e.g., Ge Bai et al., Do Nonprofit Hospitals Deserve Their Tax Exemption? 389 New Eng. J. Med. 196, 197 (2023) (“Many nonprofit hospitals face substantial fiscal challenges, so heavy-handed policies — such as eliminating tax-exempt status across the board — are likely to be counterproductive.”).

¹⁵ See, e.g., Thomas G. Morton, The History of the Pennsylvania Hospital (1751–1895) (1897); N. I. Bowditch, A History of the Massachusetts General Hospital (1851). In a bibliographical note at the end of his leading text on the early history of hospitals in the United States, historian Charles E. Rosenberg describes the focus of earlier histories on the evolution of individual hospitals rather than on the field. See Charles E. Rosenberg, The Care of Strangers 353–59 (1987).

¹⁶ See, e.g., Rosenberg, supra note 15; Paul Starr, The Social Transformation of American Medicine: The Rise of a Sovereign Profession and the Making of a Vast Industry (2d ed. 2017); Rosemary Stevens, In Sickness and in Wealth: American Hospitals in the Twentieth Century (1989).

¹⁷ To the author’s knowledge, there is no comprehensive history of the role of women’s hospital auxiliary organizations in the United States. This article pulls together scholarship on women’s voluntary organizations, health care history, and individual auxiliary histories to create an initial summary for the purpose of exploring how charitable activities might be preserved regardless of the tax-status of currently exempt hospitals. It is beyond the scope of this article to provide the comprehensive history that women’s auxiliaries and their members deserve to have told.

¹⁸ Am. Hosp. Ass’n, The Auxiliary: New Concepts, New Directions 83 (1974); see also Starr, supra note 16, at 145, 148–49 (describing almshouses as housing “dependent people of all kinds” and as “places of dreaded impurity and exiled human wreckage”).

¹⁹ Am. Hosp. Ass’n, supra note 18, at 84; Morton, supra note 15, at 5 (“The Almshouse was simply a place of confinement. Willing physicians devoted much of their time to the poor, though many of these unfortunates were necessarily much neglected … .”).

²⁰ Am. Hosp. Ass’n, supra note 18 at 84; Starr, supra note 16, at 150 (explaining that charity or voluntary hospitals “were an attempt not only to separate out some of the sick from the poor and dependent, but also to provide a somewhat better alternative to the more respectable poor with curable illnesses … .”).

²¹ Charles E. Rosenberg, From Almshouse to Hospital: The Shaping of Philadelphia General Hospital, 60 Milbank Mem’l Fund Q. Health & Soc’y 108, 126 (1982).

²² Starr, supra note 16, at 151–52.

²³ Id. at 169–76 (describing growth of “particularistic” hospitals, including denominational hospitals founded in connection with the arrival of significant immigrant populations but which served a broad base of patients).

²⁴ Id. at 152–53.

²⁵ Cecilia M. Jardon McGregor, The Community Benefit Standard for Non-Profit Hospitals: Which Community, and for Whose Benefit?, 23 J. Contemp. Health L. & Pol’y 302, 305 (2007).

²⁶ Starr, supra note 16, at 150–51 (explaining that, “[a]nxious to give these hospitals a more attractive identity and make them safer and more acceptable, their managers and physicians excluded dangerous or morally reprehensible cases,” which served to “combat the traditional image of the institution as a house of death”).

²⁷ See Rosenberg, supra note 21, at 114; Jardan McGregor, supra note 25, at 305; Morris J. Vogel, Patrons, Practitioners, and Patients: The Voluntary Hospital in Mid-Victorian Boston, in Sickness and Health in America: Readings in the History of Medicine and Public Health 323, 325, 327 (Judith Walzer Leavitt & Ronald L. Numbers eds., 3d ed. 1997) (explaining that “[t]he hospital offered patients no medical advantages not available in the home; actually hospital treatment in the 1870s added risks of sepsis or ‘hospitalism’” and that “[t]he hospital was perceived as the kind of place all but the desperate would want to avoid”).

²⁸ See Rosenberg, supra note 15, at 98–99; Vogel, supra note 27, at 324–26.

²⁹ Rosenberg, supra note 15, at 97 (explaining that by 1863 the Union “had more than two hundred hospitals with almost 137,000 beds”).

³⁰ Between 1872 and 1910, the number of hospitals grew from 178 to over 4,000. Starr, supra note 16, at 169.

³¹ See Rosemary Stevens, “A Poor Sort of Memory”: Voluntary Hospitals and Government Before the Depression, 60 Milbank Mem’l Fund Q. Health & Soc’y 551, 552–55 (1982) (identifying significant staffing, organizational, and infrastructure changes in hospitals in the 1880s).

³² See Starr, supra note 16, at 154–55.

³³ Rosenberg, supra note 15, at 104–05.

³⁴ Id. at 111; see also Starr, supra note 16, at 153–54 (describing that many hospitals required patients to pay for a portion of their care). Funding of nonprofit hospitals also came from local governments in the form of lump-sum grants and per-patient reimbursement for the care of indigent patients. Stevens, supra note 31, at 554–55, 562–68.

³⁵ See Stevens, supra note 16, at 9–11, 30–32 (noting geographic variability in the percentage of operating income that came from patient fees); Nation, supra note 7, at 156. By 1903, both patient payments and governments funds appeared to surpass contributions and endowments as sources of collective hospital income. Stevens, supra note 31, at 560.

³⁶ See Stevens, supra note 16, at 20–23.

³⁷ Starr, supra note 16, at 159.

³⁸ Jeremy J. Schirra, Note, A Veil of Tax Exemption?: A Proposal for the Continuation of Federal Tax-Exempt Status for “Nonprofit” Hospitals, 21 Health Matrix 231, 238 (2011); see also Rosenberg, supra note 15, at 31–32, 245–61 (describing the conditions of early hospitals and almshouses as well as the gradual acceptance of hospitals in the early 20th century).

³⁹ See A Review of Hospital Billing & Collections Practices: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Energy & Com., 108th Cong. 18 (2004) (statement of Gerard Anderson, Dir., Johns Hopkins Ctr. for Hosp. Fin. & Mgmt.) (“Beginning in the 1920s, the ability of hospitals to improve the health status of patients increased dramatically … . Physicians had a wider range of services to provide to hospitalized patients. New drugs and new equipment became available and better and more highly trained personnel were required to provide these services. The cost of providing hospital care began to accelerate. In order to recover these higher costs, hospitals began to charge patients for services.”); Starr, supra note 16, at 160 (describing the dramatic increase in cost per bed to construct a hospital between 1870 and 1905).

⁴⁰ Stevens, supra note 31, at 574 (describing rapid growth in the hospital industry due to a larger number of paying patients and the diminished role of philanthropy).

⁴¹ Stevens, supra note 16, at 42, 47; see also Nation, supra note 7, at 156.

⁴² See Stevens, supra note 16, at 84–89.

⁴³ See id. at 84–89, 179–99.

⁴⁴ Jardon McGregor, supra note 25, at 307; Stevens, supra note 16, at 179–89. Between 1937 and 1940, the number of people covered by a health insurance plan increased seven-fold and the number of plans almost tripled. Id. at 182.

⁴⁵ Id. at 228.

⁴⁶ See id. at 216–19; U.S. Gen. Acct. Off., HRD-79-64, Hospital Loan Assistance Programs: Actions Needed to Reduce Anticipated Defaults 1–2 (1979); Lawrence J. Clark et al., The Impact of Hill-Burton: An Analysis of Hospital Bed and Physician Distribution in the United States, 1950-1970, 18 Med. Care 532, 534, 541–42 (1980) (describing that in the twenty years after its passage nearly forty percent of Hill-Burton funds had funded hospital construction in rural areas).

⁴⁷ See Starr, supra note 16, at 347–50; Daniel E. Dawes, 150 Years of Obamacare 58–60 (2016).

⁴⁸ U.S. Gen. Acct. Off., supra note 46, at 1–3 (describing how the Section 242 Mortgage Insurance Program and National Health Planning and Resources Development Act built on the Hill-Burton Act).

⁴⁹ Nation, supra note 7, at 158 n.63 (quoting 42 U.S.C. § 291c(e)); Sharon Kearney Coleman, Cong. Rsch. Serv., 98-968C, The Hill-Burton Uncompensated Services Program 2–3 (2005), https://www.everycrsreport.com/files/20050523_98-968_0d3142ebb6cf4d9b38ae8183f4641d983298c888.pdf.

⁵⁰ 42 C.F.R. § 124.503 (2023); Hill-Burton Facilities Compliance, Health Res. & Servs. Admin., https://www.hrsa.gov/get-health-care/affordable/hill-burton/compliance (last visited July 8, 2024) (“In 1979, regulations established compliance levels, eligibility, record maintenance, and reporting requirements.”).

⁵¹ Stevens, supra note 16, at 220–21.

⁵² Stevens, supra note 16, at 228 (noting that duplicative care and rising costs made it more difficult for those in need to afford care).

⁵³ Starr, supra note 16, at 350 (noting that due to certain restrictions, federal money from the program “went disproportionately to middle-income communities”). In addition, for almost twenty years the Act funded the perpetuation of hospital segregation by allowing for allegedly “like quality” facilities for different racial groups. Mary Crossley, Affirmatively Furthering Health Equity, 89 Brook. L. Rev. 495, 506–07 (2024) (noting that Hill-Burton “did not equally benefit all members of the public” because of its allowance for segregated facilities).

⁵⁴ See Rosenberg, supra note 15, at 351 (describing that post-WWII, hospitals “gradually emerged from the world of paternalism,” as evidenced by “[u]nions and a more assertive nursing profession, ever-increasing capital costs, [and] a growing dependance on federal support[.]”).

⁵⁵ Stevens, supra note 16, at 258–60; see also Starr, supra note 16, at 310–12; Dawes, supra note 47, at 61 (describing an increase from six million to seventy-five million people covered by private health insurance between 1940 and 1950).

⁵⁶ Stevens, supra note 16, at 262–63 (providing an AHA table showing average per-patient daily costs increasing from $9.39 in 1946 to $23.12 in 1955 and to $44.48 in 1965).

⁵⁷ Id. at 256–57.

⁵⁸ Id. at 269–70.

⁵⁹ Id. at 270 (noting that, in the 1950s, hospital endowments were quite small and generally constituted less than 2% of a hospital’s average income).

⁶⁰ Starr, supra note 16, at 360–61.

⁶¹ Id. at 368–69; Stevens, supra note 16, at 273–74.

⁶² See 42 U.S.C. § 1395 (prohibiting federal officials from “exercis[ing] any supervision or control over the practice of medicine or the manner in which medical services are provided”).

⁶³ See Stevens, supra note 16, at 281–83, 286–93, 322–32.

⁶⁴ See Starr, supra note 16, at 375 (discussing early Medicare payment policies); Social Security Amendments of 1965, Pub. L. No. 89-97, § 1902(a)(13), 79 Stat. 286, 345–46 (codified as amended at 42 U.S.C. § 1396a) (requiring “payment of the reasonable cost … of inpatient hospital services provided under the [state Medicaid] plan”).

⁶⁵ See Stevens, supra note 16, at 286–87; Starr, supra note 16, at 376.

⁶⁶ Starr, supra note 16, at 375–76.

⁶⁷ Stevens, supra note 16, at 275, 299–300.

⁶⁸ See id. at 275, 287–88, 293–95, 299–300.

⁶⁹ Id. at 294.

⁷⁰ Id. at 295 tbl.11.2 (presenting reported construction costs of selected nonprofit and governmental hospitals and source of funding in 1965).

⁷¹ Id. at 295 tbl.11.3 (presenting AHA data on funding sources for hospital construction from 1968–81).

⁷² Id. at 299–300, 304.

⁷³ Starr, supra note 16, at 387.

⁷⁴ See Stevens, supra note 16, at 290–92.

⁷⁵ Starr, supra note 16, at 394–99.

⁷⁶ See id. at 398–99; Stevens, supra note 16, at 307.

⁷⁷ Stevens, supra note 16, at 290.

⁷⁸ See id. at 303–04.

⁷⁹ See id. at 296–98. As for-profit chains expanded, the actual number of for-profit hospitals dropped while the number of patient beds and admissions grew significantly. Id. at 302.

⁸⁰ Id. at 304; see also Starr, supra note 16, at 429–31 (discussing various trends in hospital bed concentration within multi-hospital systems).

⁸¹ See Stevens, supra note 16, at 304.

⁸² Zelinsky, supra note 2, at 455–56.

⁸³ Stevens, supra note 16, at 309 (quoting Joseph A. Califano, Jr., America’s Health Care Revolution: Who Lives? Who Dies? Who Pays? 7 (1986)).

⁸⁴ Starr, supra note 16, at 425–26, 429 (quoting Arnold S. Relman, The New Medical-Industrial Complex, 303 New Eng. J. Med. 963, 963 (1980)), 436–38 (describing horizontal integration in “polycorporate enterprise[s]”).

⁸⁵ See id. at 453–55; Stevens, supra note 16, at 322–27; Dawes, supra note 47, at 68–69.

⁸⁶ Starr, supra note 16, at 436.

⁸⁷ See generally Joseph Zibulewsky, The Emergency Medical Treatment and Active Labor Act (EMTALA): What It Is and What It Means for Physicians, 14 Baylor U. Med. Ctr. Proc. 339 (2001).

⁸⁸ Starr, supra note 16, at 456 (noting an increase in managed care coverage among those on employer-funded health insurance plans from 27% in 1988 to 92% in 2000).

⁸⁹ See Starr, supra note 16, at 462–23.

⁹⁰ See id. at 463–64; Stevens, supra note 16, at 321, 332–33.

⁹¹ Starr, supra note 16, at 463–64; Stevens, supra note 16, at 335–36; see also Zelinsky, supra note 2, at 415 (describing vertical integration as an indicator of the commerciality of nonprofit hospitals).

⁹² Starr, supra note 16, at 474–75.

⁹³ Id. at 465–66.

⁹⁴ Id. at 467–68.

⁹⁵ Dawes, supra note 47, at 3.

⁹⁶ Id.

⁹⁷ See, e.g., Rachel Garfield et al., The Uninsured and the ACA: A Primer - Key Facts About Health Insurance and the Uninsured Amidst Changes to the Affordable Care Act, KFF (Jan. 25, 2019), https://www.kff.org/report-section/the-uninsured-and-the-aca-a-primer-key-facts-about-health-insurance-and-the-uninsured-amidst-changes-to-the-affordable-care-act-what-are-the-financial-implications-of-lacking-insu/ [https://perma.cc/R6DR-2FBN] (“In 2013, before the ACA was fully implemented, the uncompensated costs of care for the uninsured amounted to about $85 billion … . Given the high cost of hospital-based care, the majority of the cost of uncompensated care is incurred in hospitals.”).

⁹⁸ See Dawes, supra note 47, at 98.

⁹⁹ See id. at 239–42. Despite significant decreases in the number of uninsured people, there were still an estimated 25.6 million uninsured nonelderly Americans in 2022 (representing 9.6% of the population). Jennifer Tolbert et al., KFF’s Health Policy 101: The Uninsured Population and Health Coverage, KFF (May 28, 2024), https://www.kff.org/health-policy-101-the-uninsured-population-and-health-coverage/.

¹⁰⁰ Dawes, supra note 47, at 213.

¹⁰¹ See id. at 213–16.

¹⁰² See, e.g., Zachary Levinson et al., Ten Things to Know About Consolidation in Health Care Provider Markets, KFF (Apr. 19, 2024), https://www.kff.org/health-costs/issue-brief/ten-things-to-know-about-consolidation-in-health-care-provider-markets/; Hayden Rooke-Ley et al., Value-Based Payment and Vanishing Small Independent Practices, 332 J. Am. Med. Ass’n 871, 871–72 (2024) (describing challenges faced by independent practice groups in shifts toward value-based payments); Sneha Kannan et al., Changes in Hospital Adverse Events and Patient Outcomes Associated with Private Equity Acquisition, 330 J. Am. Med. Ass’n 2365, 2369–71 (2023) (describing increase in hospital-acquired conditions for patients at hospitals recently acquired by private equity firms); Joe Nocera & Bethany McLean, What Financial Engineering Does to Hospitals, Atlantic (Oct. 28, 2023), https://www.theatlantic.com/ideas/archive/2023/10/private-equity-hospitals-health-care/675779/ [https://perma.cc/ FF2M-SCTS] (describing detrimental impact of private equity investment in hospitals); Bird & Maier, supra note 9, 101–04 (describing the detrimental effects of hospital consolidation trends in the 21st century).

¹⁰³ Stevens, supra note 16, at 283.

¹⁰⁴ Am. Hosp. Ass’n, supra note 18, at 84.

¹⁰⁵ Id. The provincial legislature also provided matching funds to establish the hospital. See Rosenberg, supra note 15, at 106; Morton, supra note 15, at 6–9.

¹⁰⁶ Am. Hosp. Ass’n, supra note 18, at 84.

¹⁰⁷ Id. (“Although the stigma attached to hospitals was disappearing, health care was still an expensive privilege, and the poor had to rely upon the beneficence of the groups of wealthy women comprising hospital auxiliaries.”).

¹⁰⁸ Id.; John M. Annese, Staten Island University Hospital Auxiliary to Celebrate 150th Anniversary, silive.com (Nov. 17, 2013, 12:50 PM), https://www.silive.com/news/2013/11/staten_island_university_hospi_17.html (describing the United States’ “oldest continuous auxiliary” that started “as a group of doctors’ wives supporting a one-room infirmary for people who couldn’t afford health care on Staten Island”). Historian Charles Rosenberg notes that “committees of ‘lady visitors’” were common by the late 1860s. Rosenberg, supra note 15, at 267.

¹⁰⁹ See, e.g., Our History, Mission Health, https://www.missionhealth.org/about-us/our-history [https://perma.cc/P6V2-MDRP] (last visited June 13, 2024) (describing how Mission Hospital in Asheville, North Carolina was founded by four women who sold flowers to raise the funds needed to establish “a place … where the sick and those in need of a home could heal”); Stewarding the Soul of MGH, Mass. Gen. Hosp. (Apr. 2, 2024), https://www.massgeneral.org/news/hotline/stewarding-the-soul-of-mgh [https://perma.cc/D54R-ZDCM] (describing legacy of Women’s Visiting Committee of Massachusetts General Hospital, a volunteer auxiliary which was established in 1869); Patricia Glowinski, Med. Ctr. Archives of N.Y.-Presbyterian/Weill Cornell, Finding Aid to The Records of the Ladies’ Auxiliary to the Society of the Lying-In Hospital 2–3 (2013), https://library.weill.cornell.edu/sites/default/files/ladies_auxiliary_lih_records.pdf (describing establishment of Women’s Auxiliary of the Lying-In Hospital — later merged with New York Hospital and now New York-Presbyterian Hospital/Weill Cornell Medical Center — to raise funds to “provide care for low-income or destitute women discharged from the Hospital”); Faith Willis Bowe et al., The Women’s Auxiliary Bd. of the Univ. of Md., History of the Woman’s Auxiliary Board, University of Maryland Hospital, 1887-1970, at 5–8, 28, 36 (Helen M. Cotter ed., 1987) (describing the contributions the Women’s Auxiliary Board made to the hospital and its patients by remodeling, expanding, and providing supplies to the hospital); Rosenberg, supra note 15, at 267–71.

¹¹⁰ Wendy Kaminer, Women Volunteering: The Pleasure, Pain, and Politics of Unpaid Work from 1830 to the Present, 4–5, 21–25 (1984)

¹¹¹ Id. at 22–25.

¹¹² Rosenberg, supra note 15, at 267–68.

¹¹³ Vogel, supra note 27, at 323. Historian Morris Vogel points out that philanthropists did not always work without self-interest. Physicians providing free care to the poor in hospitals developed knowledge and expertise that benefitted their paying patients whom they treated at home. Id. at 324.

¹¹⁴ David Sloane, Not Designed Merely to Heal”: Women Reformers and the Emergence of Children’s Hospitals, 4 J. Gilded Age & Progressive Era 331, 335, 341 (2005); see also Rosenberg, supra note 15, at 114.

¹¹⁵ Vogel, supra note 27, at 328–29 (quoting The Children’s Hospital, 83 Bos. Med. & Surg. J. 140, 140 (1870)).

¹¹⁶ Id. at 330.

¹¹⁷ Sloane, supra note 114, at 335; see also Rosenberg, supra note 15, at 114 (“Specialty hospitals developed out of the energy of ambitious clinicians … and in the case of women’s hospitals with a proto-feminism. Female philanthropists were also interested in the health of children and were prominent in the work of establishing children’s as well as women’s hospitals.”). Historian Charles Rosenberg notes that women tended to play a larger, though still limited, role in the management of hospitals for women and children. Id. at 268–69. For example, in 1887, the Women’s Auxiliary Board of the University of Maryland Hospital began its work “manag[ing] the ‘domestic administration’ of the institution” and hosting fundraising events “to raise the funds needed to carry on [the] ministration[] to the needy” at the Lying-In Hospital. Willis Bowe et al., supra note 109, at 4–5.

¹¹⁸ Rosenberg, supra note 15, at 117 (“The women’s committee … became a regular feature of hospital life in this period and, with its commitment to personal visiting, brought a new and intrusive presence to the ward, impinging on the world of house physicians and nurses as well as of patients.”); Willis Bowe et al., supra note 109, at 10 (describing the establishment of the Women’s Auxiliary Board of the University of Maryland Hospital bi-weekly visiting program).

¹¹⁹ See, e.g., Julia M. Miller, New Horizons for a Woman’s Auxiliary, Am. J. Nursing, June 1949, at 381, 381 (describing how the Emory University Hospital Women’s Auxiliary began its work by providing jams, vegetables and linens to the hospital and added services including driving patients to appointments and running a library service); Willis Bowe et al., supra note 109, at 48 (noting the hours of volunteer library service and books and magazines loans by the Women’s Auxiliary Board of the University of Maryland Hospital).

¹²⁰ Stevens, supra note 16, at 22 (describing how the physician founders of the Mayo Clinic performed a tremendous number of personally lucrative operations at an “independent charitable hospital, St. Mary’s, run by the Roman Catholic Sisters of St. Francis,” where, like at many institutions, “much of the work was done, incidentally, by ill-paid or unpaid women.”).

¹²¹ See Sloane, supra note 114, at 351–54 (describing ways in which in the early nineteenth century, “women, the founding force and sustaining power of children’s hospitals throughout the last half-century, were [] being marginalized as meddling busybodies who should leave the direction of these important institutions to men.”)

¹²² Am. Hosp. Ass’n, supra note 18, at 84.

¹²³ Id.

¹²⁴ See Stevens, supra note 16, at 23–24; Willis Bowe et al., supra note 109, at 69 (describing how the Auxiliary Board created a program to promote and finance extracurricular activities for nurses).

¹²⁵ Stevens, supra note 16, at 26.

¹²⁶ Id. at 25.

¹²⁷ See, e.g., Willis Bowe et al., supra note 109, at 53–60 (describing labor shortages due to the war and ways in which auxiliary volunteers served in roles otherwise filled by staff and assisted in war efforts).

¹²⁸ Am. Hosp. Ass’n, supra note 18, at 85.

¹²⁹ Miller, supra note 119, at 381–82.

¹³⁰ See Stevens, supra note 16, at 234–35.

¹³¹ Id. at 234. The number of auxiliary members was comparable to the number of paid employees working in hospitals and reflected the prevalence of auxiliary membership in a nation with approximately 107 million people ages 15–64. See id.; U.S. Bureau of the Census, U.S. Dep’t of Com., Statistical Abstract of the United States, 1961, at 28 (1961), https://www2.census.gov/library/publications/1961/compendia/statab/82ed/1961-02.pdf.

¹³² Stevens, supra note 16, at 234–35.

¹³³ Am. Hosp. Ass’n, Patterns and Principles for Hospital Auxiliaries 46–47 (Mrs. H. Shelton Smith ed., 1957); see also, e.g., THA History, Tex. Hosp. Ass’n, https://www.tha.org/about-tha/who-we-are/tha-history/ [https://perma.cc/PR2F-UAUU] (last visited Jan. 8, 2025) (explaining that, in 1940, the “Association of Hospital Auxiliaries [was] formed,” and that this organization was “the first affiliate of the Texas Hospital Association”); Tom Sebacher, Missouri Hospital Association: 100 Years of Helping Hospitals 37 (2022) (describing the Missouri Hospital Association’s support of hospital auxiliaries, “which performed a number of essential services for the hospitals they served, forming an essential part of the industry’s educational, advocacy and public awareness activities,” in the 1960s to 1980s era).

¹³⁴ Am. Hosp. Ass’n, supra note 18, at 86.

¹³⁵ Jonathan Hayt, Law For Hospital Auxiliaries 1 (1964) (quoting Manual on Organization of Women’s Hospital Auxiliaries, published by the American Hospital Association, 1951) (copies of book pages on file with author).

¹³⁶ Id. at 6.

¹³⁷ See id. at 6, 63; Willis Bowe et al., supra note 109, at 80–86.

¹³⁸ Lawton R. Burns et al., Hospitals’ Investment and Return from Volunteer Departments and Auxiliaries: Evidence from One Community, Health Care Mgmt. Rev., Fall 1991, at 79, 79.

¹³⁹ Id. at 79.

¹⁴⁰ Am. Hosp. Ass’n, supra note 18, at 86.

¹⁴¹ Id.

¹⁴² Id. at 97.

¹⁴³ Id. at 98.

¹⁴⁴ Id. at 113 (describing the role of auxiliaries in educating the community to include “[p]roviding the community with access to informed opinion on the larger issues affecting the delivery of health care, which should be of primary importance to every consumer. Helping to orient the community on preventive health care, bringing the educational process to a personal level. Offering the institution an opportunity to obtain community feedback on attitudes toward local health care delivery”).

¹⁴⁵ See generally Kaminer, supra note 110.

¹⁴⁶ Id. at 4.

¹⁴⁷ L. A. Fogel, Financial Issues for Hospital Auxiliaries, Volunteer Leader, Winter 1986, at 8, 8–9 (“For years, hospital auxiliaries have been dedicated allies, assisting their hospitals in meeting various goals and objectives; now they are more important than ever because of the current financial pressures on hospitals.”); Burns et al., supra note 138, at 83.

¹⁴⁸ Burns et al., supra note 138, at 80.

¹⁴⁹ See, e.g., Susan J. Ellis, Second-Hand Vols: Is There Hope for Auxiliaries, NonProfit Times, July 1, 2002, https://ellisarchive.org/sites/default/files/2022-09/Second%20Hand%20Vols.pdf; Beth Steinhorn, Navigating the Conundrum of Auxiliaries, VQ Volunteer Strategies (Oct. 7, 2022), https://vqstrategies.com/auxiliaries/ [https://perma.cc/YY2M-CQFC]; Karen Nazor Hill, From Past to Present: Women’s Auxiliaries Aren’t Just an Historical Footnote, Chattanooga Times Free Press (Sept. 15, 2014, 12:01 AM), https://www.timesfreepress.com/news/2014/sep/14/from-past-to-present/.

¹⁵⁰ See Bradley Burck, Actions Your Auxiliary Must Take This Year, MHN Founds., https://mhnfoundations.org/the-auxiliary-growth-imperative/ (last visited Feb. 17, 2025).

¹⁵¹ See, e.g., Auxiliaries Merge, Create Strong, United Group of Volunteers, Barnes-Jewish Hosp. (May 9, 2010), https://www.barnesjewish.org/Newsroom/In-the-News/ArtMID/1493/ArticleID/68/Auxiliaries-Merge-Create-Strong-United-Group-of-Volunteers [https://perma.cc/YW8S-4CM2] (describing merger of auxiliaries formed in the 1950s of two hospitals that merged in the mid-1990s); Auxiliary Services Remain Integral to UHS’ Future, United Health Servs. (Apr. 29, 2024), https://www.nyuhs.org/news-search/auxiliary-services-remain-integral-uhs-future [https://perma.cc/8TNP-C6LJ] (describing merger of auxiliaries formed in 1896 and 1929).

¹⁵² See Nation, supra note 7, at 155, 160–62; see also An Acte to Redress the Misemployment of Landes Goodes and Stockes of Money heretofore Given to Charitable Uses 1601, 43 Eliz. c. 4 (Eng.) (including in a description of charitable uses the “Reliefe of aged impotent and poore people,” and “Maintenance of sicke and maimed Souldiers and Marriners”).

¹⁵³ While the focus of this article is on federal income tax exemption, the related issues of state property and income tax exemption are the subjects of similar debate and import. See Zelinsky, supra note 2, at 436–61; see also generally Michele R. Goodman, Putting the Community Back in Community Benefit: Proposed State Tax Exemption Standard for Nonprofit Hospitals, 84 Ind. L.J. 713 (2009).

¹⁵⁴ See David Hyman, The Conundrum of Charitability: Reassessing Tax Exemption for Hospitals, 16 Am. J.L. & Med. 327, 334 (1990); Crimm, supra note 6, at 9–11, 30–32.

¹⁵⁵ See The Tax-Exempt Hospital Sector: Hearing Before the H. Comm. on Ways & Means, 109th Cong. 12 (2005) (statement of Mark Everson, Comm’r, Internal Revenue Serv.). In 2005, IRS Commissioner Mark Earnest explained, “Despite the significance of hospitals and health care organizations in the tax-exempt sector, neither the Code nor the underlying regulations explicitly provides for the exemption from federal income tax of non-profit hospitals.” Id.

¹⁵⁶ Crimm, supra note 6, at 30–32.

¹⁵⁷ Id. at 32 (citing James J. Fishman, The Development of Nonprofit Corporation Law and an Agenda for Reform, 34 Emory L.J. 617, 630 (1985)).

¹⁵⁸ Wilson-Gorman Tariff Act of 1894, ch. 349, § 32, 28 Stat. 509, 556 (repealed 1895).

¹⁵⁹ Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601, 637 (1895) (declaring the 1894 income tax unconstitutional because it was a direct tax that was not apportioned to the states based on population).

¹⁶⁰ See U.S. Const. amend. XVI; Revenue Act of 1913, ch. 16, § 2, 38 Stat. 114, 166–81.

¹⁶¹ Revenue Act of 1913, ch. 16, § 2(G), 38 Stat. at 172.

¹⁶² See Eileen Salinsky, Nat’l Health Pol’y F., Issue Brief No. 821, What Have You Done for Me Lately? Assessing Hospital Community Benefit 3 (2007) (“Since the federal income tax statutes were established in 1913, not-for-profit hospitals have been treated as charitable institutions exempt from taxation.”); Tax-Exempt Hospitals and the Community Benefit Standard: Hearing Before the Subcomm. On Oversight of the H. Comm. on Ways & Means, 118th Cong. 24 (2023) (statement of Ge Bai, Professor of Accounting, Johns Hopkins Carey Bus. Sch.) (noting that, at the time the 1913 income tax was passed, nonprofit hospitals benefitting from exemption were “pure charities” that “focused on charitable activities with very little commercial activities”). Nonprofit, exempt hospitals were also distinguished from their for-profit, taxable counterparts at the state level by being protected from tort claims by charitable immunity and exempted from local property taxes. Stevens, supra note 16, at 41.

¹⁶³ Nation, supra note 7, at 163–64.

¹⁶⁴ Camic Tahk, supra note 5, at 38 (citing Crimm, supra note 6, at 10–11). But see Stevens, supra note 31, at 557–58 (describing cases demonstrating that “charity, in the sense of giving services free of charge to the poor, was not the overriding public purpose of the hospital at the turn of the century”). Historian Rosemary Stevens described an 1889–1890 study of hospital income showing a wide disparity in the percentage of income coming from patient payments between less than one percent and over seventy percent. Id. at 555.

¹⁶⁵ Supra notes 35–41 and accompanying text.

¹⁶⁶ Supra notes 42–43, 54–57 and accompanying text.

¹⁶⁷ Stevens, supra note 16, at 153 (summarizing articles from issues of Hospitals magazine in 1940 articulating the need for exempt hospitals). Historian Rosemary Stevens noted how “[b]y asserting a public mission for voluntary hospitals throughout the 1930s, the courts maintained the position that money received by voluntary hospitals from paying patients was to be regarded not as a quid pro quo of purchase but as a contribution toward maintenance of a charity.” Id. at 153 n.29, 390.

¹⁶⁸ Id. at 223 (quoting Basil C. MacLean, Hospitals Now and After the War, Hospitals, June 1942, at 13, 13–18).

¹⁶⁹ See Rev. Rul. 56-185, 1956-1 C.B. 202.

¹⁷⁰ Id.

¹⁷¹ In a separate paragraph, Rev. Rul. 56-185 alternately describes that a community hospital supported by private contributions and government grants, “formed for the purpose of furnishing hospital facilities to all persons in the community at the lowest possible cost,” and willing to accept patients regardless of ability to pay “normally meets the requirements” to be treated as a “public charitable organization.” Id. This different articulation of the organizational standard to which hospitals were subject raises interesting questions about whether tax-exemption is or should be dependent on reducing health care costs for all.

¹⁷² Id.

¹⁷³ Id.

¹⁷⁴ Id. In addition to meeting the requirements that they be organized and operated for charitable purposes, exempt organizations (including hospitals) are also required to comply with generally applicable rules relating to private inurement, legislative lobbying, and political activity. See 26 U.S.C. § 501(c)(3).

¹⁷⁵ Sonora Cmty. Hosp. v. Comm’r of Internal Revenue, 46 T.C. 519, 526–27 (1966).

¹⁷⁶ Id. at 525–26 (citing Rev. Rul. 56-185, 1956-1 C.B. 202); see also Rev. Rul. 98-15, 1998-1 C.B. 718 (quoting Sonora Cmty. Hosp., 46 T.C. at 525–26).

¹⁷⁷ See John D. Colombo & Mark A. Hall, The Future of Tax-Exemption for Nonprofit Hospitals and Other Health Care Providers, 2 Health Matrix 1, 3–4 (1992); Fox & Schaffer, supra note 8, at 261–62.

¹⁷⁸ See Rev. Rul. 69-545, 1969-2 C.B. 117.

¹⁷⁹ Id.

¹⁸⁰ Id.

¹⁸¹ Id. (modifying Rev. Rul. 56-185 by removing “the requirements relating to caring for patients without charge or at rates below cost”).

¹⁸² See generally Fox & Schaffer, supra note 8; see also Colombo, supra note 5, at 31–32.

¹⁸³ Rev. Rul. 69-545, 1969-2 C.B. 117.

¹⁸⁴ Id.

¹⁸⁵ See Colombo, supra note 5, at 31; Charitable Hospitals - General Requirements for Tax-Exemption Under Section 501(c)(3), Internal Revenue Serv., https://www.irs.gov/charities-non-profits/charitable-hospitals-general-requirements-for-tax-exemption-under-section-501c3 [https://perma.cc/7BPX-A6VK] (last visited Jan. 9, 2025). While the phrase “community benefit standard” is commonly used, the Government Accountability Office, in an April 2023 report on Service oversight of tax-exempt hospitals, noted that while the Service in Rev. Rul. 69-545 “identified factors that can demonstrate community benefits, [] they are not requirements. The Service does not have authority to specify activities hospitals must undertake and makes determinations based on facts and circumstances. As a result, tax-exempt hospitals have broad latitude to determine the community benefits they provide, but the lack of clarity creates challenges for IRS in administering tax law.” Tax-Exempt Hospitals and the Community Benefit Standard: Hearing Before the Subcomm. on Oversight of the H. Comm. on Ways & Means, 118th Cong. 8 (2023) (statement of Jessica Lucas-Judy, Dir., Strategic Issues, Gov’t Accountability Off.).

¹⁸⁶ Supra notes 74, 85–86 and accompanying text.

¹⁸⁷ See, e.g., Jardon McGregor, supra note 25, at 308–09 (noting a rise in the number of uninsured and underinsured patients between 1975 and 2005).

¹⁸⁸ See Colombo, supra note 5, at 32 (describing Service challenge, in Sound Health Ass’n v. Comm’r, 71 T.C. 158 (1978), to the exempt status of a “staff model” HMO which “accepted all paying patients, operated an open emergency room and had a board of directors drawn from the general community” because it operated primarily for the benefit of its paying members).

¹⁸⁹ The Service defines a Revenue Ruling as “an official interpretation by the Service of the Internal Revenue Code, related statutes, tax treaties, and regulations. It is the conclusion of the Service on how the law is applied to a specific set of facts.” IRM 32.2.2.3.1 (Aug. 11, 2004). While the Service generally states that “it will not take positions inconsistent with a revenue ruling published in the IRB when the revenue ruling is in effect,” courts inconsistently hold the Service and taxpayers to this sub-regulatory guidance. Milan N. Ball, Cong. Rsch. Serv., IF11604, Reliance on Treasury Department and IRS Tax Guidance (2025).

¹⁹⁰ See Colombo, supra note 5, at 32–37; see also, e.g., Sound Health Ass’n v. Comm’r, 71 T.C. 158 (1978); I.R.S. Field Serv. Adv. 200110030 (Feb. 5, 2001). Interestingly, in 2005, Service Commissioner Mark Everson asserted that it was the hospitals, not the Service’s standards, that had evolved since 1969. The Tax-Exempt Hospital Sector: Hearing Before the H. Comm. on Ways & Means, 109th Cong. 12 (2005) (statement of Mark Everson, Comm’r, Internal Revenue Serv.) (“While our standard for assessing an organization’s eligibility for tax exemption has remained essentially unchanged over 36 years, the hospital industry has not.”).

¹⁹¹ Rev. Rul. 83-157, 1983-2 C.B. 94. The Service continued to emphasize the importance of exempt hospitals serving Medicare and Medicaid patients. Id.

¹⁹² See, e.g., Geisinger Health Plan v. Comm’r, 985 F.2d 1210, 1221 (3d Cir. 1993); see also Colombo, supra note 5, at 32–37.

¹⁹³ See, e.g., IHC Care, Inc. v. Comm’r^, 82 T.C.M. (CCH) 617 (2001); IHC Group, Inc. v. Comm’r, 82 T.C.M. (CCH) 606 (2001); IHC Health Plans, Inc. v. Comm’r, 82 T.C.M. (CCH) 593 (2001).

¹⁹⁴ See Colombo, supra note 5, at 32–37.

¹⁹⁵ IHC Health Plans, Inc. v. Comm’r, 325 F.3d 1188, 1197 (10th Cir. 2003); see also Rev. Rul. 98-15, 1988-1 C.B. 718.

¹⁹⁶ See Colombo, supra note 5, at 34–35 (describing the Service’s focus on an organization’s “commitment to charity care as a significant factor” in a series of Revenue Rulings in the mid-1990s and audit guidance for agents describing the expectation of meaningful charity care).

¹⁹⁷ IHC Health Plans, Inc., 325 F.3d at 1197.

¹⁹⁸ Camic Tahk, supra note 5, at 43.

¹⁹⁹ U.S. Gov’t Accountability Off., GAO/HRD-90-84, Nonprofit Hospitals: Better Standards Needed for Tax Exemption 3 (1990).

²⁰⁰ Id. at 5.

²⁰¹ H.R. 790, 102d Cong. (1991).

²⁰² H.R. 1374, 102d Cong. (1991).

²⁰³ See, e.g., Stephanie Strom, Families Fret as Charities Hold a Billion Dollars in 9/11 Aid, N.Y. Times (June 23, 2002), https://www.nytimes.com/2002/06/23/nyregion/families-fret-as-charities-hold-a-billion-dollars-in-9-11-aid.html; Stephanie Strom, Senator Questions Finances of United Way, N.Y. Times (Aug. 22, 2002), https://www.nytimes.com/2002/08/22/us/senator-questions-finances-of-united-way.html; David B. Ottaway & Joe Stephens, Nonprofit Land Bank Amasses Billions, Wash. Post (May 3, 2003), https://www.washingtonpost.com/archive/politics/2003/05/04/nonprofit-land-bank-amasses-billions/10fdb070-d956-40e7-a508-b03483c21899; David Cay Johnston, Former Head of United Way in the Washington Area Pleads Guilty to Theft, N.Y. Times (Mar. 5, 2004), https://www.nytimes.com/2004/03/05/us/former-head-of-united-way-in-the-washington-area-pleads-guilty-to-theft.html.

²⁰⁴ The health care sector was not alone in garnering suspicion and calls for greater oversight in this era. See Dan Diamond, How Hospitals Got Richer off Obamacare, Politico (July 17, 2017, 5:00 AM), https://www.politico.com/interactives/2017/obamacare-non-profit-hospital-taxes/. Though beyond the scope of this article, significant media and Congressional attention led to review of the sector more broadly, recommendations for increased oversight and education and ultimately to adoption of various statutory changes under the Pension Protection Act of 2006 particularly focused on perceived abuses relating to charitable giving, donor advised funds and supporting organizations. See generally Panel on the Nonprofit Sector, Strengthening Transparency, Governance, Accountability of Charitable Organizations: A Final Report to Congress and the Nonprofit Sector (2005). Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780.

²⁰⁵ Lucette Lagnado, Anatomy of a Hospital Bill: Uninsured Patients Often Face Big Markups on Small Items; ‘Rules are Completely Crazy,’ Wall St. J. (Sept. 21, 2004, 12:01 AM), http://online.wsj.com/news/articles/SB109571706550822844; see also Camic Tahk, supra note 5, at 42–43. Shortly before these articles were published, the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce held a hearing on Hospital Billing and Collection Practices which highlighted many of the same issues. A Review of Hospital Billing & Collections Practices: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Energy & Com., 108th Cong. (2004).

²⁰⁶ The Tax-Exempt Hospital Sector: Hearing Before the H. Comm. on Ways & Means, 109th Cong. 3 (2005) (statement of Rep. Bill Thomas, Chairm, Comm. on Ways & Means).

²⁰⁷ Taking the Pulse of Charitable Care and Community Benefits at Nonprofit Hospitals: Hearing Before the Comm. on Fin., 109th Cong. (2006).

²⁰⁸ See Eileen Salinsky, Nat’l Health Pol’y F., Issue Brief No. 831, Show Me the Money: The Implications of Schedule H (2009).

²⁰⁹ Internal Revenue Serv., Hospital Compliance Project Final Report 1 (2009).

²¹⁰ Id. at 170.

²¹¹ Staff of S. Comm. on Fin., 111th Cong., Description of Policy Options: Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options 32 (Comm. Print 2009).

²¹² See Mary Crossley, Tax-Exempt Hospitals, Community Health Needs and Addressing Disparities, 55 How. L.J. 687, 692–95 (2012).

²¹³ See Diamond, supra note 204 (describing that “hospitals went to war” in response to threats of stricter regulations or loss of exemption).

²¹⁴ See Roger Colinvaux, Charity in the 21^st Century: Trending Toward Decay, 11 Fla. Tax Rev. 1, 51 (2011) (describing the ACA requirements as setting out “process-oriented rules that are designed to promote a more charitable outcome…” by “focusing on stopping manifestly uncharitable behavior”).]

²¹⁵ See Staff of J. Comm. on Tax’n, 111th Cong., Technical Explanation of the Revenue Provisions of the “Reconciliation Act of 2010,” as Amended, in Combination with the “Patient Protection and Affordable Care Act” 81 (Comm. Print 2010) (footnote to section describing new I.R.C. § 501(r) requirements notes that satisfaction of the new requirements is not intended to create an “inference … regarding whether an organization satisfies the present law community benefit standard”); Additional Requirements for Charitable Hospitals, 79 Fed. Reg. 78954, 78956 (Dec. 31, 2014) (codified at 26 C.F.R. pts. 1, 53, 602). Despite not replacing the community benefit standards, the requirements under I.R.C. § 501(r) have understandably become the focus of Service reviews of exempt hospital returns because they are less subjective and make it easier to confirm compliance. See U.S. Gov’t Accountability Off., GAO-23-106777, Tax Administration: IRS Oversight of Hospitals’ Tax-Exempt Status 12 (2023) [hereinafter 2023 GAO Report] (noting that sixteen hospitals that reported “no spending on community benefits were not referred for audit because they met the PPACA requirements”).

²¹⁶ Press Release, Sen. Chuck Grassley, Grassley’s Provisions for Tax-Exempt Hospital Accountability Included in New Health Care Law (Mar. 24, 2010), https://www.grassley.senate.gov/news/news-releases/grassleys-provisions-tax-exempt-hospital-accountability-included-new-health-care [https://perma.cc/Y3TD-3G32]; see also Crossley, supra note 212, at 692–95.

²¹⁷ 26 U.S.C. § 501(r)(4).

²¹⁸ Id. § 501(r)(5).

²¹⁹ Id. § 501(r)(6).

²²⁰ Id. § 501(r)(3); see generally Mary Crossley et al., Tax-Exempt Hospitals and Community Health Under the Affordable Care Act: Identifying and Addressing Unmet Legal Needs as Social Determinants of Health, 131 Pub. Health Reps. 195 (2016).

²²¹ See Rev. Rul. 56-185, 1956-1 C.B. 202, modified, Rev. Rul. 69-545, 1969-2 C.B. 117; supra notes 167–171 and accompanying text.

²²² Despite the number of uninsured individuals dropping from approximately 48 million to 30 million, a significant number of patients still need charity care. Kenneth Finegold et al., U.S. Dep’t of Health & Hum. Servs., Off. of the Assistant Sec’y for Plan. & Evaluation, HP-2021-02, Trends in the U.S. Uninsured Population, 2010–2020 (2021). In the four years after the ACA was passed, Medicaid expansion and coverage through the new Marketplace were credited with reducing charity care costs by $5.5 billion across the country. U.S. Dep’t of Health & Hum. Servs., Insurance Expansion, Hospital Uncompensated Care, and the Affordable Care Act 1 (2015).

²²³ See Fuse Brown, supra note 5, at 530 (explaining that “[t]here is nothing in § 501’s requirements to prevent a hospital from adopting a stingy financial assistance policy” or from establishing an “onerous or complicated” application process); Crossley, supra note 212, at 693 (explaining that while the financial assistance provisions of the ACA “respond directly to concerns about … hospitals’ lack of transparency regarding indigent care, [they] stop well short … of requiring hospitals to provide any particular quantum of free care to patients unable to pay”).

²²⁴ See Zelinsky, supra note 2, at 426; Bird & Maier, supra note 9, at 142–43 (advocating for increased resources for the Tax Exempt and Government Entities Division of the Service to facilitate greater oversight); see generally Weisblatt, supra note 6.

²²⁵ Zelinsky, supra note 2, at 425; see also 2023 GAO Report, supra note 215, at 7 (“[A] hospital could, in theory, maintain a tax exemption by operating an emergency room open to all and accepting patients on Medicare and Medicaid, which are common among hospitals, while spending little to no money on charity care or other community benefit activities.”).

²²⁶ See Letter from Nydia M. Velázquez et al., Members of Cong., to Daniel Werfel, Comm’r, Internal Revenue Serv., and Janet Yellen, Sec’y, U.S. Dep’t of Treasury (Apr. 4, 2024), https://www.taxnotes.com/research/federal/legislative-documents/congressional-tax-correspondence/lawmakers-urge-stronger-regulation-nonprofit-hospitals/7jf1p [https://perma.cc/9M8Q-48QH] (request from nine lawmakers that Service use its existing regulatory authority to tighten requirements under I.R.C. § 501(r) and “clarify[] that nonprofit hospitals are expected to provide charity care commensurate with their financial resources”); Zelinsky, supra note 2, at 425–27 (noting that § 501’s limitation on collection practices and charges for financial assistance eligible patients are fundamentally weak and lack meaningful enforcement mechanisms); Bird & Maier, supra note 9, at 86 (“[W]hat should communities expect in exchange when they grant hospitals such substantial tax exemptions, and how should those communities ensure that those exemptions are justified?”).

²²⁷ See generally Josh Lee & Casey Korba, Deloitte Ctr. for Health Sols., Social Determinants of Health: How are Hospitals and Health Systems Investing in and Addressing Social Needs? (2017), https://www.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-addressing-social-determinants-of-health.pdf; Crossley, supra note 8, at 76–78.

²²⁸ Prior to the adoption of the ACA, a number of states had already independently required tax-exempt hospitals to identify and report on community health needs as a condition of their state tax exemption. See, e.g., Cal. Health & Safety Code § 127350(b) (West 1996) (requiring updated assessment of the “health needs of the community serviced by the hospital” every three years); Idaho Code § 63-602D (1999) (requiring nonprofit hospitals with at least 150 beds to assess how community health needs align with hospital mission); Ind. Code Ann. § 16-21-9-7 (West 1994) (requiring disclosure of community health needs factored into community benefit plan); Md. Code Ann., Health-Gen. § 19-303(b) (West 2005) (requiring hospitals to consider state and local needs assessments in developing their own needs assessment); N.Y. Pub. Health Law § 2803-l (McKinney 1996) (requiring solicitation of input from communities served in demonstrating “the hospital’s commitment to meeting community needs” and “improving access to health care services by the underserved”); N.H. Rev. Stat. Ann. § 7:32-f (2004) (allowing hospitals to develop community needs assessment independently or in conjunction with other local hospitals).

²²⁹ Stuart Butler & Carmen Diaz, Brookings Inst., Hospitals and Schools as Hubs for Building Health Communities 2 (2016), https://www.brookings.edu/wp-content/uploads/2016/12/hospitalsandschoolsashubs_butler_diaz_120516.pdf; see also Dayna Bowen Matthew, Next Steps in Health Reform: Hospitals, Medicaid Expansion, and Racial Equity, 46 J.L. Med. & Ethics 906, 907 (2018); Blake Shultz, An Ethical Framework for “New Public Health,” 26 Quinnipiac Health L.J. 35, 56–59 (2023) (asserting that the CHNA requirements impose on exempt hospitals a “legally-obligated community involvement requirement”).

²³⁰ Despite the apparent goals of the CHNA requirements, the way that the Service requires hospitals to account for their efforts to improve community health more broadly on Schedule H to Form 990 may discourage hospitals from undertaking “community building” projects that may have the greatest long-term impact. See Sara Rosenbaum & Bechara Choucair, Expanding the Meaning of Community Health Improvement Under Tax-Exempt Hospital Policy, Health Affs. Forefront (Jan. 8, 2016), https://www.healthaffairs.org/content/forefront/expanding-meaning-community-health-improvement-under-tax-exempt-hospital-policy.

²³¹ See Janet Corrigan et al., Hospital Community Benefit Programs: Increasing Benefits to Communities, 313 J. Am. Med. Ass’n 1211, 1211 (2015) (identifying potential disparities in individual hospital efforts to address community health needs and proposing a “reorientation of hospital community benefit programs … [to] accelerate the development of successful regional health improvement initiatives”).

²³² See, e.g., CMS Issues New Roadmap for States to Address the Social Determinants of Health to Improve Outcomes, Lower Costs, Support State Value-Based Care Strategies, CMS.gov (Jan. 7, 2021), https://www.cms.gov/newsroom/press-releases/cms-issues-new-roadmap-states-address-social-determinants-health-improve-outcomes-lower-costs [https://perma.cc/Z2RD-A4AM] (describing roadmap for states to “leverage existing flexibilities under federal law to tackle adverse health outcomes” that are impacted by “social, environmental, and economic factors that can influence health status—conditions that can often have a greater impact on health outcomes than the actual delivery of health services”); see generally Timothy P. Blanchard & Margaret M. Manning, New Opportunities for Providers Addressing Social Determinants of Health: The Patient Engagement and Support Arrangements Safe Harbor, in 2021 Health L. Handbook 3 (Alice G. Gosfield ed., 2021) (outlining World Health Organization, U.S. Department of Health and Human Services, and Kaiser Family Foundation explanations of social determinants of health).

²³³ Paula M. Lantz & Sara Rosenbaum, The Potential and Realized Impact of the Affordable Care Act on Health Equity, 45 J. Health Pols. Pol’y & L. 831, 839–40 (2020) (describing the CHNA requirements as “effectively redefin[ing] the role of tax-exempt hospitals as community public health actors beyond their traditional role as a source of clinical care”); see also Hannah R. Sullivan, Hospitals’ Obligations to Address Social Determinants of Health, 21 Am. Med. Ass’n J. Ethics 248, 250 (2019) (explaining hospitals’ continued focus on charity care rather than community health improvement activities by noting that “population health is substantially determined by community-based issues that fall outside the purview of basic clinical care”); Michael Rozier et al., How Should Nonprofit Hospitals’ Community Benefit Be More Responsive to Health Disparities?, 21 Am. Med. Ass’n J. Ethics 273, 274 (2019) (“Hospital experience and expertise reside in clinical care, so hospitals naturally lean toward doing what they do best.”).

²³⁴ Sullivan, supra note 233, at 250–52 (noting that the § 501(r) regulations “do not identify particular mechanisms for addressing community needs, nor do they mandate any specific infrastructure for intervention” and highlighting state efforts to fill these gaps); Rozier et al., supra note 233, at 274 (“[C]urrent [community benefit] regulations still fall short of their potential to direct nonprofit hospitals’ activity toward improving the health of their communities.”); see also Crossley, supra note 8, at 73 (“[T]he IRS should further refine its [CHNA] guidance to promote greater transparency, accountability, community engagement and collaboration.”).

²³⁵ See Crossley, supra note 8, at 79–80 (describing the strategic, cultural, and staffing gaps that traditional hospitals may face fulfilling the spirit of the CHNA requirements and explaining that financial incentives work against hospitals improving community health).

²³⁶ Camic Tahk, supra note 5, at 80. In her early post-ACA study of hospital community benefit activities, Professor Susannah Camic Tahk identified that hospitals with broader and more basic community health needs may conclude from their CHNAs that significant investments are needed while hospitals in more affluent areas may face significantly lower burdens. Id.

²³⁷ This article focuses on hospitals and auxiliaries that are exempt from federal income tax under I.R.C. § 501(c)(3) based on their charitable purposes and operations. An alternative to charitable tax exemption for hospitals could be exemption under I.R.C. § 501(c)(4) as social welfare organizations. This alternative has been the primary route for exemption of nonprofit health insurers because of their inability to provide free care. See generally IHC Health Plans, Inc. v. Comm’r, 325 F.3d 1188 (10th Cir. 2003) (finding that a health plan did not qualify for tax-exemption under § 501(c)(3)).

²³⁸ See Bird & Maier, supra note 9, at 86, 109; Nicholas Archibald, Restoring Balance to the Federal Tax-Exemption Regime’s Treatment of Hospitals: Let Their Actions Speak Louder Than Their Charters, 45 Campbell L. Rev. 237, 262–67 (2023).

²³⁹ See, e.g., Eric Obernauer, Hospitals Refute Negative Charity Care Report, The NonProfit Times (June 20, 2023), https://thenonprofittimes.com/healthcare/hospitals-refute-negative-charity-care-report/; Rick Pollack, Hospitals and Health Systems More Than Earn Their Tax Exemption, Am. Hosp. Ass’n (Mar. 16, 2023, 12:48 PM), https://www.aha.org/news/blog/2023-03-16-hospitals-and-health-systems-more-earn-their-tax-exemption [https://perma.cc/7KPF-P32W] (describing analysis by a Kaiser Family Foundation analysis as taking a “narrower view” and using “fuzzy math”); Fair Share Spending: 2023 Results, Lown Inst. Hosps. Index, https://lownhospitalsindex.org/2023-fair-share-spending/ [https://perma.cc/63B4-RR5D] (estimating that among 1773 tax-exempt hospitals in 2020, there was a deficit of $14.2 billion between the value of the hospitals collective tax benefits and the amount they spent on “charity care and community investment”); Derek Jenkins & Vivian Ho, Nonprofit Hospitals: Profits and Cash Reserves Grow, Charity Care Does Not, 42 Health Affs. 866, 868–69 (2023) (describing a reduction in charity care by nonprofit hospitals between 2012 and 2019 despite an increase in hospital profits); Zare et al., supra note 13, at 279 (concluding in a study of 1472 nonprofit hospitals that almost 40% did not provide more community benefit than the value of tax-exemption and that 86% did not provide more “incremental charity care” than that value).

²⁴⁰ EY, Estimates of the Federal Revenue Forgone Due to the Tax-Exemption of Non-Profit Hospitals Compared to the Community Benefit They Provide, 2019, at 1 (2022), https://www.aha.org/system/files/media/file/2022/06/E%26Y-Benefit-of-of-Tax-Exemption-Report-FY2019-FINAL-with-links.pdf; Anna Wilde Mathews et al., Big Hospitals Provide Skimpy Charity Care—Despite Billions in Tax Breaks, Wall St. J. (July 25, 2022, 10:26 AM), https://www.wsj.com/articles/nonprofit-hospitals-vs-for-profit-charity-care-spending-11657936777 (citing Gerard Anderson’s $60 Billion estimate).

²⁴¹ Jamie Godwin et al., The Estimated Value of Tax Exemption for Nonprofit Hospitals Was About $28 Billion in 2020, KFF (Mar. 14, 2023), https://www.kff.org/health-costs/issue-brief/the-estimated-value-of-tax-exemption-for-nonprofit-hospitals-was-about-28-billion-in-2020/ [https://perma.cc/5HZU-7U2Y]. This reflected an estimated $8.7 billion, or 45% increase, over the span of the nine years. Id. at fig.3.

²⁴² Id. It is no wonder, in light of the fact that the value of foregone state and local taxes exceeded the foregone federal income tax, that many states and localities have purposefully challenged the exemption of many hospitals under existing rules and raised the bar which hospitals must meet to qualify. See, e.g., Kim Simmons, Nonprofit Hospitals’ Community Benefits Should Actually Benefit the Community: How IRS Reforms Can Improve the Provision of Community Benefits, 22 Rich. Pub. Int. L. Rev. 465, 482-86 (2019) (describing state property tax requirements in Illinois, Utah, Pennsylvania, Nevada and Texas); Bird & Maier, supra note 9, 119–26 (describing the narrowing of hospital property tax exemption in Pennsylvania). Though state and local property tax exemption is beyond the scope of this article, the proposal here to shift federal exemption from hospitals to their auxiliaries would likely have downstream effects in those states where federal exemption serves as a proxy for exemption from state and local tax exemption.

²⁴³ Godwin et al., supra note 241.

²⁴⁴ EY, supra note 240, at 3.

²⁴⁵ See generally David A. Brennen, A Diversity Theory of Charitable Tax Exemption–Beyond Efficiency, Through Critical Race Theory, Toward Diversity, 4 Pitt. Tax Rev. 1, 20 (2006) (“[T]he charitable tax exemption is about much more than mere tax relief.”).

²⁴⁶ 26 U.S.C. § 501.

²⁴⁷ 26 U.S.C. § 501(c)(3); see supra Part II.A. Though I.R.C. § 501(c)(3) uses the phrase “organized and operated exclusively” for exempt purposes, “the definition of the word exclusively in the law of tax-exempt organizations, is different from the meaning normally associated with the word.” Bruce R. Hopkins, The Law of Tax-Exempt Organizations § 4.4 (12th ed. 2019). Exclusively is treated as if it means primarily, which is necessary to allow exempt organizations to undertake a certain amount of unrelated business activities. Id.

²⁴⁸ While exempt hospitals are relieved of the obligation to pay federal income tax on income derived from activities that are related to their exempt charitable purposes, they are subject to tax on unrelated business activities. 26 U.S.C. § 511. Related exempt activities of a hospital include providing inpatient hospital care, operation of outpatient clinics, providing staffing to nursing homes, pharmaceutical sales to patients, gift shop and cafeteria sales to patients, staff and visitors, and operation of a parking lot for patients and visitors. Hopkins, supra note 247, § 24.5(b).

²⁴⁹ Hopkins, supra note 247, § 7.6(A).

²⁵⁰ Rev. Rul. 69-268, 1969-1 C.B. 160.

²⁵¹ Rev. Rul. 69-269, 1969-1 C.B. 160.

²⁵² I.R.S. Priv. Ltr. Rul. 84-52-099 (Sept. 26, 1984). Interestingly, in a study of hospital profitability based on 2013 data, Professors Bai and Anderson identified that many hospitals subsidize their unprofitable patient care services with unrelated activities including “communication services, television and radio services … parking fees, laundry and linen service, meals sold to employees and guests, rental of living quarters, sales of medical and surgical supplies to nonpatients…tuition, sales from shops … rental of vending machines, and rental of hospital space.” Bai & Anderson, supra note 5, at 890.

²⁵³ See Hopkins, supra note 247, § 24.2(g). In a 2021 study, Sandeep Dahiya and David Yermack reported that a sample of 925 hospitals that filed an IRS Form 990 held beginning of the year investment assets valued at just over $50 billion. Sandeep Dahiya & David Yermack, Investment Returns and Distribution Policies of Non-Profit Endowment Funds 35–36 (Eur. Corp. Governance Inst., Finance Working Paper No. 582/2018, 2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3291117.

²⁵⁴ 26 U.S.C. § 512(b)(1), (5).

²⁵⁵ Building on the work of Professors Henry Hansmann, Boris Bittker and George Radhert, Professor Daniel Halperin articulated how justifying exemption of investment income from taxation requires going beyond consistent application of neutral taxation rules to allow for capital subsidies to the promotion of long-term savings on the part of charitable entities. Daniel Halperin, Is Income Tax Exemption for Charities a Subsidy?, 64 Tax L. Rev. 283, 308–09 (2011).

²⁵⁶ 26 U.S.C. § 11(b).

²⁵⁷ While the current corporate tax rate is 21%, many corporations pay tax at a significantly lower effective rate. This is seemingly less true for for-profit hospitals and other healthcare companies. In 2018, profitable healthcare companies in the Fortune 500 paid corporate income tax at an effective rate of 20.7%, while the effective rate across industries was 11.3%. Tara Bannow, Healthcare Industry Had Highest Federal Income Tax Rates in 2018, Mod. Healthcare (Jan. 4, 2020, 12:00 AM), https://www.modernhealthcare.com/finance/healthcare-industry-had-highest-federal-income-tax-rates-2018#.

²⁵⁸ Godwin et al., supra note 241.

²⁵⁹ Hansmann, supra note 7, at 54, 59.

²⁶⁰ 26 U.S.C. § 170(c)(2) (defining deductible charitable contributions as “a contribution or gift to or for the use of” an organization that is organized and operated exclusively for charitable or other exempt purposes, “no part of the net earnings of which inures to the benefit of any private shareholder or individual;” and which meets the requirements of I.R.C. § 501(c)(3) with respect to lobbying and political activities); 26 U.S.C. § 170(b) (describing that donations to a hospital “the principal purpose or functions of which are the providing of medical or hospital care or medical education or medical research” are generally deductible up to 50% of the donor’s adjusted gross income).

²⁶¹ 26 U.S.C. §§ 642, 2055, 2522.

²⁶² See State and Local Tax Treatment of Charitable Contributions, U.S. Charitable Gift Tr. (Feb. 5, 2025), https://www.uscharitablegifttrust.org/tax-treatment-of-charitable-contributions.php [https://perma.cc/T7VL-2XLK].

²⁶³ Godwin, et al., supra note 241. This estimate was based on “multiplying charitable contributions by the estimated average household marginal tax rate of donors to health care organizations” on the assumption that donors would decrease their contributions by an amount equal to their tax increase. Id.

²⁶⁴ According to a study on the impact of the 2017 tax reforms by the Urban Institute & Brookings Institution, the federal tax subsidy for charitable giving dropped by approximately $21 billion dollars between 2017 and 2018. How Did the TCJA Affect Incentives for Charitable Giving?, Urb. Inst. & Brookings Inst. (Jan. 2024), https://www.taxpolicycenter.org/briefing-book/how-did-tcja-affect-incentives-charitable-giving [https://perma.cc/V545-TK2F]. This likely reflects deductions not claimed by donors whose charitable contributions and other possible deductions were exceeded by the new higher standard exemption, and perhaps a reduction in donations due to the change in their deductibility. During the same time, the number of taxpayers claiming charitable contribution deductions dropped from approximately 37 million to about 16 million. Id. An exceptional example of the importance of small donations is seen at St. Jude’s Children’s Research Hospital. In 2012, the average donation to St. Jude’s, which used philanthropy to cover approximately 74% of its operating costs, was $30. Lindsay Jones, Millions from Millions: Small Donors Allow St. Jude Children’s Research Hospital to Take the Hardest Cases Without Charging Families a Dime, Philanthropy Roundtable (Summer 2012), https://www.philanthropyroundtable.org/magazine/millions-from-millions/ [https://perma.cc/BHL2-67QA].

²⁶⁵ 26 U.S.C. §§ 103, 141, 145. See Amanda Beck et al., Strategic Reporting by Nonprofit Hospitals: An Examination of Bad Debt and Charity Care, 26 Rev. Acct. Stud. 933, 943 (2021).

²⁶⁶ Beck et al., supra note 265, at 934. Professor Beck and colleagues identify an interesting tension between the need of nonprofit borrowers to demonstrate financial strength and the ability to repay debt (in part, by carrying a low level of bad debt) and the expectation of stakeholders and the public that nonprofit hospitals “will provide significant amounts of charity care” and operate with “near-zero profits.” Id. at 937–39. They found that this tension leads nonprofit hospitals to shift bad debt to charity care in anticipation of tax-exempt bond issuances, which can create uncertainty for hospitals and their creditors. Id. at 963.

²⁶⁷ 26 U.S.C. § 145; I.R.S. Tech. Adv. Mem. 20-00-06049 (Oct. 22, 1999).

²⁶⁸ 26 U.S.C. § 145; see also Module I: IRC § 145 – Qualified 501(c)(3) Bonds, Internal Revenue Serv., https://www.irs.gov/pub/irs-tege/teb_phase_1_course_11204_-10module_i.pdf .

²⁶⁹ Godwin et al., supra note 241. KFF estimated that in 2020 the value of local property tax exemption for nonprofit hospitals was approximately $5 billion. Id. As of 2017, thirty-two states specifically exempted hospitals from local property taxes while the other eighteen provided exemption to hospitals based on their charitable status. Eric J. Santos, Property Tax Exemptions for Hospitals: A Blunt Instrument Where a Scalpel Is Needed, 8 Colum. J. Tax L. 113, 120–21 (2017). States vary significantly in the requirements imposed on hospitals with exempt property, including with respect to the purposes for which property is used, the requirement that a hospital provide community benefits in exchange for relief from taxation and the expectation of community benefit reporting. See Bird & Maier, supra note 9, at 110–11.

²⁷⁰ Public Health Services Act § 340B, 42 U.S.C. § 256b; 340B Eligibility, Health Res. Serv. Admin, https://www.hrsa.gov/opa/eligibility-and-registration (June 2024) [https://perma.cc/4ZCW-6BZS]; see Bai et al., supra note 14, at 196–97 (critiquing “‘buy low, sell high’” approach of some hospitals to leveraging the 340B program to generate revenue).

²⁷¹ Weisblatt, supra note 6, at 698–99.

²⁷² 26 U.S.C. §§ 3301, 3306(c)(8).

²⁷³ 39 U.S.C. § 3626; U.S. Postal Serv., PS Form 3624, Application to Mail at Nonprofit USPS Marketing Mail Prices (2017).

²⁷⁴ See Brennen, supra note 245, at 24; Bird & Maier, supra note 9, at 115 (“For hospitals in particular, being labeled a tax-exempt charitable entity increases the public’s ‘trust and favorable perception of the hospital.’”) (quoting Weisblatt, supra note 6, at 699).

²⁷⁵ See Am. Hosp. Ass’n, supra note 18, at 37 (“[I]t is preferable for an auxiliary to be legally organized as an integral part of its parent institution.”).

²⁷⁶ See Hayt, supra note 135, at 53.

²⁷⁷ Id.

²⁷⁸ I.R.S. Info. Ltr. 2002-0100 (June 28, 2002) [hereinafter 2002 Advisory Letter].

²⁷⁹ A “public charity” avoids classification as a private foundation by meeting one of the public support tests under I.R.C. § 509(a)(1) or § 509(a)(2). See Hopkins, supra note 247, § 12.3. Publicly supported charities generally either receive a substantial part of their support (at least 1/3) from grants and gifts from a governmental unit or the public or receive a substantial portion (at least 1/3) of their support from gross receipts for services provided and contributions, grants and memberships and not receive more than 1/3 of their support from gross investment income. Treas. Reg. § 1.170A-9(f)(2); 26 U.S.C. § 509(a)(2)(A), 509(e).

²⁸⁰ 26 U.S.C. § 509(a)(3); Treas. Reg. § 1.509(a)-4 pmbl., 88 Fed. Reg. 71287, 71287 (Oct. 16, 2023).

²⁸¹ Treas. Reg. § 1.509(a)-4(f)(2).

²⁸² Treas. Reg. § 1.509(a)-4(g).

²⁸³ Id.

²⁸⁴ Treas. Reg. § 1.509(a)-4(h).

²⁸⁵ Treas. Reg. § 1.509(a)-4(i).

²⁸⁶ See 26 U.S.C. § 501(c)(3).

²⁸⁷ See generally Geoffrey G. Hemphill, Life After Death of a Tax-Exempt Hospital: Creative Use of Supporting Organizations After the Sale, 16 Exempt Org. Tax Rev. 1009 (1997) (describing rise in health care consolidation and hospital sales to for-profit entities in the 1990s and structural options for dedicating sale proceeds to charitable use).

²⁸⁸ See Treas. Reg. § 1.501(c)(3)-1(c)(2).

²⁸⁹ 2002 Advisory Letter, supra note 278.

²⁹⁰ Id.

²⁹¹ The 2002 Advisory Letter appeared to expand the range of possibilities presented in an internal 1996 Exempt Organizations CPE text which identified that the proceeds of the sale of an exempt nonprofit hospital to a for-profit entity would likely flow to an existing community trust, to an existing exempt parent organization with remaining health care facilities or to a newly created private foundation that would “make[] grants to support health related projects in the community.” Charles F. Kaiser & T.J. Sullivan, Integrated Delivery Systems and Health Care Update, IRS Exempt Org. Continuing Pro. Educ. Tech. Instruction Program Textbook for Fiscal Year 1996, at 10, https://www.irs.gov/pub/irs-tege/eotopicp96.pdf [hereinafter 1996 EO CPE].

²⁹² Rev. Rul. 68-489, 1968-2 C.B. 210.

²⁹³ Id. Interestingly, these requirements are similar to the expenditure responsibility rules applied to private foundations under Tax Reform Act of 1969. See Staff of the J. Comm. on Tax’n, 98th Cong., Description of Income Tax Provisions Relating to Private Foundations 25–26 (Comm. Print 1983). This suggests a similarity between Congress’s skepticism about the propriety of certain private foundation expenditures and the Service’s broader skepticism about grants by charitable organizations to non-charitable entities.

²⁹⁴ 2002 Advisory Letter, supra note 278.

²⁹⁵ Rev. Rul. 68-489, 1968-2 C.B. 210.

²⁹⁶ 2002 Advisory Letter, supra note 278.

²⁹⁷ Id.

²⁹⁸ I.R.S. Priv. Ltr. Rul. 2022-48-016 (Dec. 2, 2022).

²⁹⁹ 2002 Advisory Letter, supra note 278.

³⁰⁰ Rev. Rul. 56-304, 1956-2 C.B. 306; see also Church in Boston v. Comm’r, 71 T.C. 102 (1978).

³⁰¹ See Rev. Rul. 56-304, 1956-2 C.B. 306; Church in Boston, 71 T.C. at 107.

³⁰² Rev. Rul. 68-73, 1968-1 C.B. 251. The activities of this organization were much narrower than those undertaken by many auxiliaries and included providing personal services to improve the mental health and well-being of patients including by reading to them and writing letters for them. See id.

³⁰³ Id.

³⁰⁴ Id.

³⁰⁵ Id.

³⁰⁶ Rev. Rul. 79-358, 1979-2 C.B. 225. Despite the Service recognizing that the activities of this organization relieved poverty and the distress of medically and financially needy patients, if such a collaboration is not properly structured it could raise potential issues under the federal beneficiary inducement statute, Anti-Kickback Statute and similar state laws which prohibit the provision of remuneration to influence patients to use a provider’s services or induce or reward patient referrals, including patient self-referrals. See generally 42 U.S.C. §§ 1320a-7a(a)(5), 1320a-7b(b).

³⁰⁷ Rev. Rul. 69-267, 1969-1 C.B. 160.

³⁰⁸ 2002 Advisory Letter, supra note 278.

³⁰⁹ See Pooja Kumar & Ramya Parthasarathy, Walking Out of the Hospital: The Continued Rise of Ambulatory Care and How to Take Advantage of It, McKinsey & Co. (Sept. 18, 2020), https://www.mckinsey.com/industries/healthcare/our-insights/walking-out-of-the-hospital-the-continued-rise-of-ambulatory-care-and-how-to-take-advantage-of-it [https://perma.cc/WE8D-3KT3].

³¹⁰ 2002 Advisory Letter, supra note 278.

³¹¹ Id.

³¹² The broader implications and advisability of encouraging (or forcing) the conversion of tax-exempt nonprofit hospitals into taxable institutions is beyond the scope of this Article. It is worth noting growing concerns about the impact of for-profit, and particularly private equity investment, in hospitals. See, e.g., supra note 102; Hannah-Alise Rogers & Alexander H. Pepper, Cong. Rsch. Serv., LSB11215, Private Equity Investments in Health Care: Selected Enforcement Issues (2024); Staff of J. Econ. Comm., 118th Cong., Predatory Private Equity Practices Threaten Americans’ Health and the Economy (Comm. Print 2024).

³¹³ While many currently exempt hospitals might decide they are unable to operate successfully within heightened parameters (and therefore would forfeit their exemption), certain hospitals that provide significant free care, devote the majority of income to research, provide necessary medical education opportunities or operate in significantly underserved communities could likely maintain their exempt status and comply with stricter requirements. See, e.g., Zare et al., supra note 13, at 282.

³¹⁴ See supra note 5 (describing ways in which exempt hospitals operate differently from their taxable counterparts); Am. Hosp. Ass’n, supra note 18, at 98 (describing community health focused activities undertaken by auxiliaries).

³¹⁵ See, e.g., Jennifer Bringle, Hospital Conversion Foundations Become Philanthropic Powers, Cardinal News (May 16, 2022), https://cardinalnews.org/2022/05/16/hospital-conversion-foundations-become-philanthropic-powers/ [https://perma.cc/8GVF-QLRM]; Emma Dill, How 111 Wilmington Nonprofits Will Spend $9 Million from Hospital Sale, Wilmington StarNews (Dec. 27, 2022 5:04 AM), https://www.starnewsonline.com/story/news/local/2022/12/27/these-wilmington-nonprofits-will-get-hospital-sale-endowment-money/69728986007/ [https://perma.cc/QDB7-7LCW]; Jessi Stone, New Health Foundation to Form Following Mission Sale, Smoky Mountain News (July 25, 2018), https://smokymountainnews.com/archives/item/25224-new-health-foundation-to-form-following-mission-sale Linda G. Greenberg, Profile: Foundations Formed Through Nonprofit Hospitals’ Sales, 10 Health Affs. 180 (1991). If an exempt parent organization remains after a sale, sale proceeds may be retained and repurposed for other charitable activities subject to state law restrictions on charitable funds. See, e.g., Jack E. Karns, Justifying the Nonprofit Hospital Tax Exemption in a Competitive Market Environment, 13 Widener L.J. 383, 513–16 (2004) (describing retention of sale proceeds from sale of hospitals and long-term care facilities by a multi-state system and state challenges to the transfer of funds out of state).

³¹⁶ See Crossley, supra note 8, at 74–75 (describing ambiguity in regulations under I.R.C. § 501(r) regarding redirection of charity care funding to more public health focused efforts).

³¹⁷ See Corrigan et al., supra note 231, at 1211–12.

³¹⁸ See generally Rosenbaum & Choucair, supra note 230; Rozier et al., supra note 233, at 274–277 (advocating for “[a] shift toward community health improvement [that] requires hospitals to view themselves as part of the larger community health ecosystem” and identifying ways the CHNA process and focus could be improved).

³¹⁹ See Lantz & Rosenbaum, supra note 233, at 840 (describing community health focused efforts of exempt hospitals).

³²⁰ See Crossley, supra note 212, at 697–702 (proposing that the CHNA requirement be interpreted to oblige exempt hospitals to engage with public health officials and community members and noting resistance of hospitals to “widening their focus to include not only individual patients but population-level health needs”).

³²¹ See Corrigan et al., supra note 231, at 1211–12 (recommending removal of anti-trust barriers to regional collaboration in community benefit work by hospitals).

³²² See supra note 306 and accompanying text.

³²³ See 26 U.S.C. § 501(r)(1)(B), 501(r)(4); Treas. Reg. § 1.501(r)-4(b)(5).

³²⁴ Compare 1996 EO CPE, supra note 291, at 10 (a foundation could make “grants to all local health care providers for the reimbursement of medical services. The disproportionate payment to the purchaser of the exempt hospital…to the detriment of other community wide providers, is a negative factor.”), with 2002 Advisory Letter, supra note 278 (describing that an exempt auxiliary may make payments to a taxable hospital for patient care without indicating a need to fund care at facilities across a community).

³²⁵ See generally Off. of Inspector Gen., U.S. Dep’t of Health & Hum. Servs., Guidance Document: Hospital Discounts Offered to Patients Who Cannot Afford to Pay Their Hospital Bills (Feb. 2, 2004), https://oig.hhs.gov/documents/other-guidance/908/FA021904hospitaldiscounts.pdf (“Hospitals have the ability to provide discounts to uninsured and underinsured patients who cannot afford their hospital bills and to Medicare beneficiaries who cannot afford their Medicare cost-sharing obligations”); Off. of Inspector Gen., U.S. Dep’t of Health & Hum. Servs., OIG Advisory Opinion No. 15-16 (Jan. 4, 2016), https://oig.hhs.gov/documents/advisory-opinions/712/AO-15-16.pdf (confirming that a patient assistance program established by a 501(c)(3) organization that sought contributions from pharmaceutical companies that sold treatments for the diseases for which assistance would be provided would not constitute illegal kickbacks or result in monetary penalties); but see Blanchard & Manning, supra note 232, § 3.1 (listing risk factors identified by the Office of Inspector General to the Department of Health and Human Services relating to provider contributions to bona fide charities maintaining patient assistance programs, including the need for independence of the charity from the healthcare provider).

³²⁶ See generally Church in Boston v. Comm’r, 71 T.C. 102 (1978) (affirming the Service’s denial of an organization’s exempt status in part due to a lack of documentation of grant activities).

³²⁷ See I.R.S. Form 990, Schedule H (2024), https://www.irs.gov/pub/irs-pdf/f990sh.pdf.

³²⁸ 2002 Advisory Letter, supra note 278.

³²⁹ See supra note 260 and accompanying text.

³³⁰ Maintaining an affiliation between the previously exempt hospital and its successor auxiliary would also likely facilitate the closest possible application of restricted charitable funds to their original purposes.

³³¹ See Hansmann, supra note 7, at 66–71.

³³² See, e.g., Shannon McGhee Hernandez, Note, Conversions of Nonprofit Hospitals to For-Profit Status: The Tennessee Experience, 28 U. Mem. L. Rev. 1077, 1079–81, 1084–85 (1998) (describing that the “conversion of nonprofit hospitals [in the 1990s] produced billions of dollars for the benefit of new charitable foundations created by the conversion process” and discussing the purposes to which those funds should be dedicated); Hemphill, supra note 287, 1016–18; 1996 EO CPE, supra note 291, at 9–13 (describing exemption considerations when proceeds of an exempt hospital sale are transferred to a newly formed private foundation).

³³³ See, e.g., Dill, supra note 315.

³³⁴ The ability of a successor private foundation to adopt broader charitable purposes than its original charitable hospital depends largely on whether state law applies a charitable trust or nonprofit corporate standard to the disposition of assets. See Hernandez, supra note 332, at 1094–1101.

³³⁵ Bringle, supra note 315.

³³⁶ See 1996 EO CPE, supra note 291, at 11–13.

³³⁷ Id. at 10 (describing that a newly formed successor foundation is more likely to be exempt if it makes proportionate “grants to all local health care providers for the reimbursement of medical services” rather than focusing its efforts on providing reimbursements to the successor hospital).

³³⁸ See Hemphill, supra note 287, at 1010 n.4. To maximize board control and minimize the taxes paid, Mr. Hemphill recommends the use of a supporting organization rather than a private foundation and suggests that in some cases it is advisable to create a new public charity to be supported. See id. at 1011, 1020, 1022.

³³⁹ See id. at 1011–12; 1996 EO CPE, supra note 291, at 13.

³⁴⁰ According to an analysis of IRS Form 990 data, in 2018 hospital endowments held approximately $51 billion in assets. Dahiya & Yermack, supra note 253, at 36. This amount exceeded endowment funds held by other exempt sectors including organizations dedicated to arts, culture and humanities, the environment, human services, or religious purposes. Id.

³⁴¹ See supra Part II.C. Centering local, individual hospital auxiliaries in addressing unmet health needs runs counter to the significant consolidation of hospitals and efforts to similarly consolidate philanthropic efforts. See Betsy Chapin Taylor, Systemization of Health Care Philanthropy 2.0, Am. Hosp. Ass’n, https://trustees.aha.org/systemization-health-care-philanthropy-20 [https://perma.cc/4KRF-V2XG] (describing the “systemization of fund development efforts, leveraging organizational scope and strengths to increase total dollars raised and improve return on investment”).

³⁴² See 26 U.S.C. § 509(a)(1), (2).

³⁴³ Treas. Reg. § 1.170A-9(f)(6)(i), (v) (describing how grants from public charities are fully included in an organization’s total support calculations, without being subject to the generally applicable 2% limitation).

³⁴⁴ Alternately, the nonprofit corporation through which the hospital operated could remain in existence as the surviving auxiliary with the endowment and other charitable assets remaining. If an independent auxiliary exists, it could be merged into the surviving entity. This approach, however, risks the imposition of an exempt hospital’s residual liabilities on the auxiliary. See Hemphill, supra note 287, at 1020–21.

³⁴⁵ See Raymond J. Mitchell, Comment to Why It’s Hard to Raise Funds for Hospitals, Future Fundraising Now (Nov. 2, 2023), https://futurefundraisingnow.com/2023/10/why-its-hard-to-raise-funds-for-hospitals/ [https://perma.cc/Y8LE-S3ZV] (“[O]ne of the primary reasons for the difficulties in productive fundraising today for healthcare institutions, particularly the so-called “nonprofit” or “charity” institutions, is that they are increasingly viewed as anything but “nonprofit” or “charity” organizations”). In addition to the challenges of donors who may be skeptical about the charitable nature of a nonprofit hospital, health care organizations face a number of other unique fundraising challenges that auxiliaries may also face. See, e.g., Greta Daniels & Justin Marquart, Three Key Challenges for Healthcare Fundraising That Are Really Opportunities, Ass’n for Healthcare Philanthropy (Oct. 26, 2022), https://www.ahp.org/resources-and-tools/ahp-connect/ahp-connect-details/three-key-challenges-for-healthcare-fundraising-that-are-really-opportunities [https://perma.cc/8B38-V789] (“Donors are busier, less loyal, and have less attention for the tried-and-true non-profits of hospitals, churches, and colleges.”).

³⁴⁶ See Elvia Castro et al., BBB Wise Giving All., Give.org Donor Trust Report 2022: Five-Year Review of Trust and Giving Attitudes 19, 21 (2022), https://give.org/docs/default-source/donor-trust-library/donor_trust_report_2022_five_year_review.pdf (noting that 58% of survey respondents trust small charities more than large charities and that 1/5 of respondents indicated that a charity’s financial transparency, low administrative costs and reasonable executive salary were salient factors in their trust of an organization).

³⁴⁷ See Ind. Univ. Lilly Fam. Sch. of Philanthropy, What Americans Think About Philanthropy and Nonprofits 21–25 (2023), https://scholarworks.indianapolis.iu.edu/server/api/core/bitstreams/b5904a8a-5081-42cd-bd44-56740b98fb67/content (noting that only 39% of survey respondents highly trusted non-profit organizations to do what is right and less than 25% of respondents viewed non-profit giving practices as highly transparent); Castro et al., supra note 346, at 5 (describing that in 2021 20.4% of survey respondents highly trusted charitable organizations); Ben Paynter, What Do People Want When They Give to Nonprofits?, Fast Co. (Sept. 25, 2017), https://www.fastcompany.com/40469133/what-do-people-want-when-they-give-to-nonprofits (describing examples of “charitable malfeasance” which have led to an enduring trust problem).

³⁴⁸ See CCF’s 10 Principles, Cmty.-Centric Fundraising, https://communitycentricfundraising.org/ccf-principles/ [https://perma.cc/DGV5-ZS8Y] (“These 10 Principles are how we aspire to transform fundraising and philanthropy, so that they are co-grounded in racial and economic justice.”).

³⁴⁹ See Richard E. Thompson, Profiling Patients to Identify Prospective Donors, 15 Virtual Mentor 114 (2013) (describing ethical dilemma faced by physicians in context of patient wealth profiling).

³⁵⁰ See Salamon, supra note 10, at 14; see also Goodman, supra note 153, at 736–38 (describing how increased reliance on philanthropy by hospitals could increase transparency and focus on community goals).

³⁵¹ Apart from the proposal in this article that hospitals might forego exemption and focus relevant charitable endeavors in an auxiliary, increasing the deduction limit for gifts restricted to charity care and specified community benefits could have the effect of leveling the playing field between exempt and taxable hospitals. See Hyman & Sage, supra note 5, at W314–15 (arguing that tax benefits related to community benefits provided by hospitals should attach to activities rather than to organizational form).

³⁵² See Hemphill, supra note 287, at 1020–21 (describing the risk that significant contributions from a new supporting organization to a newly formed public charity jeopardize the public charity’s status).

³⁵³ See supra notes 265–68 and accompanying text.

³⁵⁴ See Horwitz, supra note 5, at 1367 (finding that, when comparing similarly sized hospitals, for-profit status is strongly associated with profitable service offerings and not associated with unprofitable service offerings).

³⁵⁵ See supra notes 46–53 and accompanying text.

³⁵⁶ See supra note 269 and accompanying text.

³⁵⁷ See Community Benefit State Law Profiles Comparison, The Hilltop Inst. UMBC, https://hilltopinstitute.org/our-work/hospital-community-benefit/hcbp-state-comparison/ [https://perma.cc/KF4P-ELCW] (listing state community benefit requirements to be eligible for property tax exemption).

³⁵⁸ See supra notes 107–121 and accompanying text.

³⁵⁹ Id.

³⁶⁰ See supra note 113 and accompanying text.

³⁶¹ See supra notes 122–137 and accompanying text.

³⁶² Cf. Vogel, supra note 27, at 324, 330–31 (describing nineteenth century hospitals as “acting as a guarantor of social stability” when they treated the poor in ways that emphasized that such patients were “enjoying a privilege and [that]their gratitude was expected in return” while benefitting the hospital physicians and their wealthy benefactors).

³⁶³ See Rev. Rul. 69-545, 1969-2 C.B. 117; Am. Hosp. Ass’n, supra note 18, at 85 (emphasizing the “new role” of auxiliaries as providing service to the total community).

³⁶⁴ See generally Atinuke O. Adediran, Nonprofit Board Composition, 83 Ohio State L.J. 357 (2022) (identifying benefits of diverse board membership as required for Legal Services Corporation public interest legal organizations); see also Crossley, supra note 212, at 699 (citing public health literature emphasizing “the importance of local community input and engagement to implementing initiatives that seek to change the dynamics producing negative health outcomes”).

³⁶⁵ See supra notes 338–39 and accompanying text.

³⁶⁶ See Sahar Andrade, Why Diversity on Nonprofit Boards Is Crucial to Their Impact, Forbes (Sept. 27, 2021, 7:15 AM) https://www.forbes.com/councils/forbescoachescouncil/2021/09/27/why-diversity-on-nonprofit-boards-is-crucial-to-their-mission/ [https://perma.cc/9QL8-9EE7] (“Diversity is closely related to community perceptions of a nonprofit organization’s equality image and the ideals of fairness. When nonprofits boards do not reflect the diverse communities they serve, it creates a disconnect and can sew mistrust.”).

³⁶⁷ See supra Part I.B.

³⁶⁸ See Carolyn Aragão, For Many U.S. Moms, Pandemic Brought Increases in Time Spent Caring for Kids While Doing Other Things, Pew Rsch. Ctr. (Oct. 11, 2022), https://www.pewresearch.org/short-reads/2022/10/11/for-many-u-s-moms-pandemic-brought-increase-in-time-spent-caring-for-kids-while-doing-other-things (noting there are “sizable gender differences in the amount of time that parents spend on child care … with fathers spending considerably less time than mothers on both primary and secondary child care”); Sarah Jane Glynn, Ctr. for Am. Progress, An Unequal Division of Labor (2018), https://www.americanprogress.org/wp-content/uploads/sites/2/2018/05/Parent-Time-Use.pdf (noting that being the parent of a young child reduces women’s work hours and disproportionately increases women’s time spent on household labor); Labor Force Participation Rate for Women Highest in the District of Columbia in 2022, U.S. Bureau of Lab. Stat. (Mar. 7, 2023), https://www.bls.gov/opub/ted/2023/labor-force-participation-rate-for-women-highest-in-the-district-of-columbia-in-2022.htm ("The age groups of 25 to 34 years, 35 to 44 years, and 45 to 54 years all had [employment] participation rates above 75.0 percent … .”).

³⁶⁹ In addition to debates about whether exempt hospitals meaningful differentiate themselves from their for-profit counterparts with respect to the provision of charity care and other community benefits, exempt hospitals have been scrutinized for compensating their executives in ways that put into question the prioritization of their charitable purposes. See, e.g., Vikas Saini et al., Nonprofit Hospital CEO Compensation: How Much is Enough?, Health Affs. Forefront (Feb. 10, 2022), https://www.healthaffairs.org/content/forefront/nonprofit-hospital-ceo-compensation-much-enough (noting that CEOs of large hospitals and hospitals that serve wealthier, well-insured patients tend to earn higher salaries than CEOs of smaller hospitals or hospitals that care for publicly-insured or uninsured patients); Boden, supra note 3 (“[Some researchers worry that] these big salaries may be incentivizing CEOs to make decisions that don’t benefit patients … .”). As the debate around § 501(r) highlighted the on-going struggle to define what is required of tax-exempt nonprofit hospitals, legislation aimed more generally at excessive executive compensation at large tax-exempt institutions was passed in connection with the Tax Cuts and Jobs Act of 2017. Newly added I.R.C. § 4960 aimed to address these concerns by imposing a tax on all organizations exempt under § 501(a), including all organizations described under § 501(c)(3), on compensation in excess of $1 million paid to certain highly compensated employees. 26 U.S.C. § 4960. Professor Zelinsky has argued that because this section mirrors a provision limiting the deductibility of excess compensation for taxable businesses, the imposition of this tax confirms that “hospital managers act as de facto equity, extracting dividend-like payments of corporate earnings form these allegedly nonprofit [sic] organizations under the guise of earned compensation.” Zelinsky, supra note 2, at 431–34.