Like most, I have a bittersweet relationship with taxes. I bristle when I see the total amount I pay every year, but intellectually and emotionally, I believe it is part of my duty within my community. As an emergency physician, after these past 17 months, I know what it looks and feels like when a lack of investment and development in our systems and infrastructure impacts the health and safety of a population. So much sadness could have been prevented.
That’s a lesson we’re learning the hard way as a society: If we don’t focus on development and investment now, we will pay later for the consequences. And nowhere is that clearer than in our public health.
From food and housing insecurity, unemployment and a dearth of options for children and adults to be safely outside, Philadelphia came face to face with gaps in our public services. This year, whether through unemployment checks, WiFi access for schools, or free vaccinations, all of us benefited from governmental services at some point. Yet we’re not all paying equal shares into the system.
Philadelphia debated its taxes this recent budget cycle, with some City Council members pushing to reduce wage, business, and parking taxes to spur economic growth among Philadelphians and businesses in light of the devastation of COVID-19. Philadelphians remain the highest-taxed city dwellers in the country. But the perhaps more impactful conversation we should be having is about some of the city’s towering institutions contributing a meaningful share.
Philadelphia is well-known as the city of meds and eds, with more than 100 colleges and universities in the region, including top internationally recognized medical institutions. With health care the largest workforce sector of our city, this cohort knows the Philly wage tax well. But as nonprofit entities, many academic institutions and hospitals pay no property tax — funds that would support, among other entities, the Philadelphia School District. Fourteen of the city’s top 25 largest nonprofits (56%) as of 2018 were hospitals or other health-care providers.
The Affordable Care Act (ACA) established a requirement for nonprofit hospitals to justify their tax exemptions by doing a Community Health Needs Assessment and developing a Community Health Implementation Plan to address identified gaps every three years. Each nonprofit hospital system in our region reports annually on the community benefit they provide.
A report published in October highlights the variation and broad definition of community benefit. Community health improvement services and cash/in-kind donations made up 6.9% of reported benefit. The majority of hospital community benefit went toward patient care services such as unreimbursed care (41%), charity care (21%), and subsidized health services (9%). With no minimum requirement to maintain tax exemption, the monetary equivalent of community benefit varies greatly among hospitals in our city and region. But it’s overwhelmingly focused on the care for individuals, not the catchment areas of institutions nor the city as a whole.
It’s time for academic nonprofit hospitals to reconsider their role as pillars in the community and contribute more intentionally to the resilience and long-term success of Philadelphia. The very institutions that offer a gateway to further opportunities and advancement through medical education and training have not significantly contributed to an equitable playing field for developing and supporting the children of this city, to bring more through their admission doors. The renowned schools of medicine and public health in our region — who research, publish, and spread awareness of the social determinants of health including quality public education and economic stability — have not contributed enough to tackle those social determinants within our city.
There’s precedent for more direct financial contributions than loosely defined “community benefit.”
There’s precedent for more direct financial contributions than loosely defined “community benefit”: After Penn for PILOTS drew attention to Penn’s lack of tax payments for years, Penn committed $100 million in 2020 to the Philadelphia School District.
The COVID-19 pandemic and its fallout have undeniably shown the connections among economic stability, race, gender, education, zip code, isolation, and health-care access for us as individuals and as a city. The worst impact has struck those who have less. This was also true for hospitals and medical institutions confronting razor-thin margins resulting from systems built to rely on high-cost procedures and less on primary care and prevention. We saw how, despite their nonprofit names, many health systems function just as any big business might with a focus on returns and profits. It echoes how when a firm bought Hahnemann hospital only to close it the next year, we saw how private equity values a Center City real estate footprint more than the services it offered and the safety net it provided.
As we start to emerge from the living laboratory of COVID shutdown, there are so many lessons we can build upon: removing policy and regulatory barriers to care, expanding telehealth access for all Philadelphians, and expanding community-centered initiatives. We also have a “meds and eds” brain trust and workforce of innovative problem solvers that is nearly unparalleled, with a mission to heal and empower.
But fulfilling that mission requires sustained investment — both in creativity and capital. Ben Franklin’s famous adage “…in this world there is nothing certain but death and taxes” seems not to apply equally to all parts of our society. This is particularly salient in the city where it was penned. Now we can redefine how we might contribute to improve quality of life to prevent premature and unnecessary death. We need all hands on deck — particularly our medical institutions — to reimagine civic contributions and drive the tide that would allow all boats to rise.
Priya E. Mammen is an emergency physician and public health consultant. She is chair of the Section on Public Health and Preventive Medicine at the College of Physicians of Philadelphia and adjunct faculty of Health and Societies at the University of Pennsylvania. @PEMammen