Nonprofit hospitals deliver vital community services that we all risk losing if their nonprofit status is jeopardized.
What Hoosiers Stand to Lose Without Nonprofit Hospitals
By Scott B. Tittle, President, Indiana Hospital Association
The ultimate mission of all hospitals and health systems, regardless of size and type of ownership, is to care for their patients and communities.
That’s why Indiana’s hospitals are more than just places of healing—they are our community anchors, mission-driven institutions that invest in the health and well-being of Hoosiers far beyond the bedside.
Yet recent media attention and discussions in Washington, D.C. have questioned whether nonprofit hospitals are doing enough to fulfill their charitable purpose, particularly when it comes to providing charity care and community benefit. These narratives miss the broader picture: nonprofit hospitals deliver vital community services that we all risk losing if their nonprofit status is jeopardized.
Let’s imagine that for a moment. What exactly would Indiana communities lose?
First and foremost, the significant and essential safety net for those in need would fray. In 2022 alone, Indiana’s nonprofit hospitals provided $1.8 billion in uncompensated and discounted care1. That includes financial assistance for uninsured patients, reduced-cost care for those in coverage gaps, and the losses hospitals absorb because government reimbursements—specifically, Medicare and Medicaid—fall way short of the actual cost of care. It also includes write-offs when patients don’t pay their bills, which are estimated to make up more than 1% of hospital expenses in Indiana each year to the tune of $290 million that hospitals will never receive. This level of commitment represents a lifeline for hundreds of thousands of Hoosiers and exceeds national averages2.
If hospitals were to lose their nonprofit status, this significant commitment to the community at large could be dramatically scaled back or eliminated altogether.
And charity care is only one piece of the puzzle as it alone doesn’t capture the full scope of a hospital’s total community benefit. If we want to talk about charity care, we must ask: what does that really mean? It’s not just free health care services—it’s a comprehensive approach to making that care more accessible. It’s the work hospitals do 24 hours a day, 7 days a week to ensure patients aren’t turned away, even when the majority of a hospital’s reimbursement doesn’t cover the actual cost of care. It’s the investment in services that may never break-even but are essential to a community’s health.
One of the most compelling indicators of this commitment is the scale of community benefit programs. According to a recent report by Ernst & Young, Indiana’s nonprofit hospitals provided $3.9 billion in total benefits to their communities in 2022—nearly 2.5 times the value of their tax exemptions3.
Second, Indiana’s rural and underserved areas would face even greater challenges if their local hospital lost its nonprofit status. Nonprofit hospitals often invest in essential services like OB-GYN care, behavioral health, and emergency medicine—services that are very costly to provide but are also critical to every single community. These essential services are often provided at a loss but are part of a hospital’s community benefit outside of direct charity care. They not only benefit the health of a community but the economic growth of the state. They also provide programs tailored to specific local needs, like chronic disease prevention, nutrition education, transportation support for seniors, and health screenings—all designed to improve health outcomes. In many communities, these programs are the only resources available to address these challenges.
Third, the ripple effects would extend to education and workforce development. Nonprofit hospitals invest heavily in training the next generation of health professionals—nurses, doctors, technicians—through residency programs, scholarships, and continuing education. These investments strengthen Indiana’s health care workforce and help address shortages in key areas. Without the financial flexibility and mission-driven focus of nonprofit hospitals, these programs could be scaled back, jeopardizing the pipeline of talent our future workforce depends on.
Finally, the financial stability of hospitals themselves would be compromised. Tax-exempt status helps nonprofit hospitals with tight finances maintain sustainable margins to continue providing access to care. These margins enable investments in facilities, technology, and workforce development—critical components of a strong health care ecosystem. Their financial health supports favorable bond ratings, which are essential for borrowing funds to upgrade infrastructure. These practices reflect responsible stewardship and a long-term vision for community care.
Contrary to some reports suggesting that nonprofit hospitals are overly profitable, audited financial statements submitted to the IRS show that many Indiana hospitals are in fact operating at a loss. In 2023, the state’s five largest hospital systems posted an average operating margin of -1.1%4 while the statewide average hospital operating margin was 0.9% — well below the national average of 2.3% for the same year5. Despite these financial headwinds, Indiana hospitals continue to invest generously in their communities, demonstrating a steadfast commitment to their nonprofit mission and our Hoosier state.
As policymakers consider the future of nonprofit health care in Indiana, we must all urge them to consider the lives touched, the programs sustained, and the communities strengthened by nonprofit hospitals. The question isn’t whether these institutions are doing enough—it’s whether we can afford to live without them.
[1] Value of Tax Exemption of Tax-Exempt Hospitals in Indiana for Tax Year 2022 by Ernst & Young, December 2024.
[2] Tax-exempt Hospitals Provided $149 Billion in Total Benefits to Their Communities by Ernst &Young, July 2025.
[3] Value of Tax Exemption of Tax-Exempt Hospitals in Indiana for Tax Year 2022 by Ernst & Young, December 2024.
[4] 2023 Hospital Audited Financial Statements, Indiana Department of Health.
[5] Report: Indiana Hospital Margins Under 1%, Below National Average by Kaufman Hall, May 2024.
Article source: Scott Tittle: What Hoosiers stand to lose without nonprofit hospitals, Indianapolis Business Journal, October 20, 2025. Shared here with permission from IBJ Editor Lesley Weidenbener.
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