Nonprofit hospitals are increasingly betting big on risky investments like private equity and hedge funds, a new University of Chicago study finds. Their combined portfolios hit $296 billion in 2023, with investment income swinging wildly — down 16% in 2022, then up 113% in 2023. Researchers warn these volatile returns could ripple into patient care, staffing, and community health services.
Nonprofit hospitals aren't just treating patients — they're increasingly acting like institutional investors. A new University of Chicago study published in Health Affairs analyzed nearly 2,400 nonprofit hospitals' IRS tax returns from 2010 to 2023 and found their combined investment portfolios totaled $296 billion in 2023, up from $189 billion in 2010 (inflation-adjusted). A growing share of those holdings are in complex, non-publicly traded vehicles like private equity, hedge funds, and venture capital — instruments with limited liquidity, less regulatory oversight, and higher risk.
The volatility is striking: average annual investment income growth swung from -16% in 2022 to +113% in 2023. Researchers warn that when markets dip, hospitals may respond by cutting services, deferring upgrades, raising prices, or laying off staff — consequences felt most acutely in vulnerable communities.
By the Numbers:
Why it matters: As nonprofit hospitals deepen their ties to financial markets, policymakers and regulators face growing pressure to determine whether tax-exempt status and community benefit obligations are keeping pace with these institutions' increasingly investor-like behavior.
