For Virginia King, a metastatic breast cancer patient, the “nonprofit” mission of her local hospital felt like a hollow promise when she received a bill for $22,700 for a drug with a list price of just $2,700. In Pennsylvania, residents watching the Super Bowl this past February saw $8 million commercials for elite medical centers, while in New Mexico, a $100 million independent clinic was forced to shutter its doors after a bitter dispute with a dominant hospital system.
These stories are becoming the face of a growing national outcry. While more than 2,900 U.S. hospitals hold tax-exempt status as nonprofits, critics argue they have undergone a “mission drift,” prioritizing aggressive expansion, lavish marketing, and high-margin profits over the charity care that justifies their tax breaks.
For example, “nonprofit” NYU Langone faced criticism in 2025 for buying a Super Bowl ad while paying no federal income taxes.
At the center of the debate is a safety-net program for hospitals serving low-income patients called the 340B drug discount program. It requires drugmakers to provide steep discounts on outpatient drugs, with the mission of freeing up resources for nonprofits to provide more care.
However, since the Medicaid expansion under the Affordable Care Act, the program has exploded. Today, more than 2,700 hospitals participate, including world-renowned institutions like Cedars-Sinai and the Cleveland Clinic. A 2025 report from the Congressional Budget Office confirmed what many suspected: the program now incentivizes hospitals to acquire independent clinics and prescribe higher-cost drugs to capture larger profit margins.
“Anyone who says 340B is cost-neutral to the taxpayer, isn’t paying attention,” Sen. Bill Cassidy, R-La., said during a Senate committee hearing into the program. “As the 340B program grows, so do healthcare costs.”
It’s a metaphor for the overall trend of nonprofits appearing to profit from programs designed to help Americans in need.
The primary justification for a hospital’s tax-exempt status is “charity care” — free or discounted services for those in need. While some systems have increased this spending, critics say it hasn’t kept pace with their revenue.
A September 2025 House Ways and Means report found that nonprofit hospitals receive $37 billion in annual tax benefits, yet their community benefit spending falls short by more than $25 billion relative to those tax breaks.
In Philadelphia, Jefferson Health saw its advertising budget surge from $190,000 in 2017 to more than $12.47 million in 2023. When NYU Langone dropped $8 million on a Super Bowl LIX ad, Rep. Greg Murphy, R-N.C., questioned why a tax-exempt entity was spending “exorbitant amounts” on national branding rather than local care.
The drive for “Big Business” scale is also reshaping the medical landscape. In 2024, Jefferson Health finalized a $14 billion merger with Lehigh Valley Health Network, creating one of the 15 largest systems in the country.
Expansion often comes at the cost of competition. In Santa Fe, the independent Nexus Health announced it will close its massive, three-story outpatient clinic in January 2026. The closure follows a years-long battle with the 340B-eligible Christus St. Vincent, which Nexus accused of “stamping out competition” by revoking hospital privileges for independent specialists.
The tide may finally be turning in Washington. In late 2025, the 340B ACCESS Act was introduced in the House to establish a clear statutory definition of an “eligible patient” and ensure that discounts actually reach the vulnerable.
“The goal,” Cassidy said in a recent report on hospital transparency, “is to restore trust and transparency without dismantling the safety net.”
For patients like Virginia King, whose $22,700 bill was called a “misunderstanding” after media inquiries, reform cannot come soon enough. As Congress weighs new oversight, the question remains: Can these institutions be “nonprofit” in more than just name?
ABOUT THE WRITER
Jessica Towhey writes on education and energy policy for InsideSources.com.
