Why Are Tax-Exempt Hospitals Spending Millions on Stadiums?

Tax-exempt hospitals receive billions of dollars in tax benefits each year to support their charitable missions. Some of those same institutions are spending millions of dollars to put their names on stadiums, arenas, and other sports facilities.

Valley Children’s Healthcare in California, for example, entered a 10-year, $10 million partnership with Fresno State that included naming rights to the university’s football stadium. According to Stateline, the agreement included access to a skybox suite, catering, hundreds of game tickets, and seats for hospital officials on charter flights to away games. Valley Children’s has defended the partnership as an investment in health care, education, workforce development, and its broader relationship with the community.

Other tax-exempt health systems have made similar investments. Bon Secours Mercy Health spent more than $4 million to renew naming rights for an arena in Greenville, South Carolina. Tennessee-based Erlanger agreed to put its name on the Chattanooga Lookouts’ new minor league baseball stadium.

Hospitals can advertise and pursue sponsorship agreements like any other organization. Their tax-exempt status provides substantial federal, state, and local tax advantages based on the expectation that these institutions serve a charitable purpose. Multimillion-dollar sports sponsorships deserve scrutiny when taxpayers are helping support the institutions paying for them.

A recent analysis from the Paragon Health Institute found that current federal oversight provides taxpayers with too little information about the activities hospitals report as community benefits. Congress is considering new transparency requirements that would provide a clearer accounting.

Stadium Deals Highlight the Problem

Sports sponsorships can provide substantial marketing value. Naming rights place a health system’s brand on a prominent venue and often come with additional advertising, hospitality, and promotional benefits.

Forbes recently highlighted a 10-year naming-rights agreement between tax-exempt Texas Health Resources and a new $88 million stadium in Mansfield, Texas. The arrangement provides Texas Health with prominent branding, digital promotion, and status as the facility’s official health partner.

Health systems often present these partnerships as community investments. Valley Children’s has pointed to educational and workforce-development benefits from its relationship with Fresno State. Erlanger has said its Chattanooga agreement helps the health system connect with the community in a competitive health care market.

The partnerships may provide community benefits, but they provide business benefits as well. Increased name recognition can help a hospital attract patients, recruit employees, and strengthen its position against competitors. Those commercial benefits should be considered when policymakers evaluate how much charitable value a hospital provides in exchange for tax exemption.

Community Benefits Extend Well Beyond Charity Care

Federal policy has not always evaluated tax-exempt hospitals under the current system. Paragon notes that an IRS ruling in 1969 moved away from a standard centered on providing charity care to patients unable to pay. Hospitals instead became eligible for tax exemption under a broader community-benefit standard.

The change expanded the types of activities hospitals could use to demonstrate their charitable role. Community-benefit reporting now reaches beyond direct patient assistance and includes nonclinical programs and other expenditures.

Paragon has called for more detailed reporting of quality improvement, nonclinical programming, and advertising expenses. Advertising deserves particular attention as tax-exempt health systems spend millions of dollars on sports sponsorships and naming-rights agreements.

Hospitals have legitimate reasons to market their services. Marketing expenditures that help attract patients, recruit employees, and promote a hospital brand should be identified clearly rather than blurred together with charitable care when evaluating the public value provided by a tax-exempt institution.

Hospital Tax Exemptions Are Worth Billions

A JAMA study estimated that 2,927 tax-exempt hospitals received $37.4 billion in tax benefits in 2021. The estimate included $11.5 billion from the federal income tax exemption, $9.1 billion from sales tax exemptions, $7.8 billion from property tax exemptions, and $3.7 billion from state income tax exemptions.

State and local tax advantages accounted for more than half of the estimated total. The benefits were concentrated among large institutions, with just 7 percent of tax-exempt hospitals receiving half of the estimated tax benefits. The largest quarter of hospitals accounted for 71 percent of both total net income and tax benefits.

Those exemptions carry costs for federal, state, and local governments. Property, sales, and income taxes that are not collected from tax-exempt hospitals are unavailable for other public priorities or must be collected from other taxpayers.

With $37.4 billion in estimated annual tax benefits at stake, taxpayers should be able to see what hospitals provide in return.

Major Tax-Exempt Health Systems Control Substantial Assets

Kaiser Foundation Health Plan, Kaiser Foundation Hospitals, and their subsidiaries and affiliates reported approximately $123 billion in total assets at the end of 2024. The balance sheet included $2.1 billion in cash and cash equivalents, $9.9 billion in current investments, and $54.4 billion in noncurrent investments.

Those categories totaled more than $66 billion in cash and investments. Kaiser also reported $115.8 billion in operating revenue and $12.9 billion in net income for the year, although $6.8 billion of its net income reflected gains associated with acquisitions.

Large financial reserves are not evidence by themselves that a health system has failed to fulfill its charitable obligations. They show the financial scale of institutions that continue to receive preferential tax treatment. A tax-exempt health system controlling tens of billions of dollars in investments should be able to provide a detailed accounting of the charitable benefits it provides in exchange for those tax advantages.

Congress Is Seeking More Transparency

H.R. 9504, the “Tax Exempt Hospital Transparency Act,” advanced through the U.S. House Ways and Means Committee and would require additional reporting from tax-exempt hospitals.

The legislation would require greater detail about quality improvement, nonclinical programming, and advertising expenses reported as community benefits. More precise reporting would help policymakers identify how much hospital spending directly benefits patients and how much supports activities that provide commercial value to the institution.

The legislation would not restrict hospitals from purchasing stadium naming rights, sponsoring sports teams, or advertising their services. Hospitals could continue making those decisions with their own resources. The additional reporting would give taxpayers more information about how those expenditures are treated when hospitals account for the community benefits associated with their tax-exempt status.

CFE Takeaway

Stadium naming-rights agreements provide a visible example of the need for better oversight of tax-exempt hospitals. A $10 million football stadium partnership that includes a skybox, catering, game tickets, and travel benefits looks considerably different from free or discounted medical care for patients who cannot afford treatment.

Tax-exempt hospitals receive billions of dollars in federal, state, and local tax advantages each year. Some of the largest systems also control tens of billions of dollars in financial assets. Congress should require these institutions to provide a clear accounting of the charitable benefits they deliver in exchange for their tax exemptions.

H.R. 9504 would provide taxpayers with more information to judge that exchange and hold tax-exempt hospitals accountable for the privileges they receive.