Hospital leaders across the country are raising concerns over the Senate’s version of a proposed federal tax bill, warning that the legislation could significantly erode the financial health of nonprofit hospitals and jeopardize care for underserved communities.

The bill, introduced as part of broader federal tax reform efforts, includes provisions that would reduce support for tax-exempt hospitals and eliminate financial tools that many rely on to maintain services. Critics argue the legislation would increase operational costs while limiting hospitals’ ability to invest in community health programs and infrastructure.

“This bill moves in the wrong direction,” said Rick Pollack, president and CEO of the American Hospital Association (AHA). “It undermines the financial foundation that allows hospitals—especially those serving low-income and rural populations—to provide essential care.”

One of the key concerns is the potential elimination of tax-exempt bond financing, a mechanism that nonprofit hospitals use to fund capital improvements and equipment purchases. Without it, many institutions would face higher borrowing costs, making it more challenging to invest in upgrades or expand services.

Additionally, the bill would place new limits on the deductibility of charitable donations, which could discourage contributions that many hospitals depend on for critical programs.

Hospital executives and industry advocates argue that the proposed changes ignore the vital role nonprofit hospitals play in the healthcare system. Many of these facilities operate on thin margins and already face mounting financial pressures from workforce shortages, inflation, and increasing demand for services.

“If enacted, this bill could force hospitals to make hard choices—cut back on services, delay capital projects, or even close facilities,” said Stacey Hughes, executive vice president of the AHA. “And those decisions will directly impact patients.”

As the debate in Congress continues, healthcare leaders are urging lawmakers to reconsider provisions that would weaken the financial tools hospitals rely on to serve their communities. The AHA and other organizations have pledged to continue advocating for changes to protect access to care and maintain hospital sustainability nationwide.