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April 16, 2024 | Tom Ballard

Covenant Health cited in national report for its exceptional level of “fair share spending”

It was one of 10 nonprofit hospital systems cited among 2,400 and the only one in the Volunteer State.

The Lown Institute, a nonpartisan healthcare think tank, released a new report recently examining the finances of more than 2,400 nonprofit hospitals in the U.S. and one headquartered in Knoxville was cited for its exceptional level of “fair share spending.”

Covenant Health was one of 10 health systems in the country that had the largest fair share surpluses, meaning their spending on community investments exceeded the value of their tax exemption in 2021. For the report, Lown calculated private nonprofit hospitals’ based on Internal Revenue Service Form 990 for the fiscal year ending 2021 by comparing estimated value of hospital tax exemptions to money spent on meaningful community investments.

The analysis included the following IRS categories: financial assistance, community health improvement services, cash and in-kind contributions, community-building activities, and subsidized health services. Lown determined that those categories “are most likely to have a direct and meaningful impact on community health.” Researchers excluded categories of Medicaid shortfall, health professions education, and research.

Hospitals with at least 5.9 percent of overall expenditures dedicated to financial assistance and meaningful community investment were considered to have spent their “fair share.”

“In addition to the categories mentioned in the Lown report, our full scope of community investment also includes uncompensated care which is not reimbursed by government programs, and investment in health professionals’ education. In some instances, Covenant Health’s total community investments have approached or exceeded $300 million annually,” said Jim VanderSteeg, Covenant Health’s President and Chief Executive Officer. “We also provided over $770 million annually in employee wages, salaries, and benefits, and have invested over a billion dollars in facilities and equipment for our member hospitals and other service locations over the past decade.”

Covenant Health, which reported $48 million in fair share surplus spending, was the only health system in Tennessee to make the top 10 list. Others cited with the largest fair share surpluses can be found here.

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