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Atrium, Novant, other hospital systems get millions in property tax breaks

Shows a woman standing on the front porch of a low brick house. Next door, there's another brick home that's owned by Atrium Health
Michelle Smolowitz
Terry Taylor-Allen lives on Fountain View in Charlotte’s Dilworth neighborhood. The homes on either side of her aren’t subject to property taxes because they are owned by The Charlotte-Mecklenburg Hospital Authority, otherwise known as Atrium Health.

As Charlotte leaders discuss a possible tax increase, Mecklenburg County hospitals are exempt from $23 million per year in property taxes, a Charlotte Ledger/N.C. Health News analysis shows. Hospitals say they provide millions in discounted medical care – but others say it’s time for big hospitals to pay up.

Every year, Terry Taylor-Allen and her husband, William, pay property taxes on their bungalow in Charlotte’s Dilworth neighborhood. Although the bill has skyrocketed since they moved in 30 years ago, they know the money supports schools, police and other important services.

The owner of the houses next door, meanwhile, don’t pay a cent on those homes.

That’s because the houses on either side of them are owned by The Charlotte-Mecklenburg Hospital Authority, a governmental entity otherwise known as Atrium Health.

Because it’s a hospital authority, Atrium — which had $8.9 billion in revenue in 2021 — does not have to pay taxes on property it owns in Charlotte and across the region.

That’s true even if the land isn’t used for medical purposes.

In fact, one tax-exempt Atrium property in Cornelius is home to a PDQ Tenders chicken restaurant. You’ll pay taxes when you buy the chicken tenders, but Atrium doesn’t pay taxes on the land the restaurant sits on.

Charlotte’s other health care giant, Novant Health, also gets significant tax exemptions. Because it’s a nonprofit hospital and not a public one, it gets a tax break only on property it can show it is using for its charitable purpose.

“If you think about the cumulative total of everything (the hospitals) have taken off the tax rolls over the years, that’s a Godzilla number,” said Taylor-Allen, who lives on Fountain View next to the site where Atrium’s Carolinas Medical Center is expanding. “Think about all the school needs and how much that money could help low-income people who don’t have health care, housing or food.”

As Mecklenburg County officials discuss a possible tax increase this year, a Charlotte Ledger/N.C. Health News analysis reveals that the two hospitals now own properties assessed at more than $2.4 billion — but which is tax-exempt — in Mecklenburg County alone. That’s based on 2022 assessed values; it’s likely worth more based on the 2023 values recently mailed out.

If Atrium and Novant were fully taxed in 2022, they would have been Mecklenburg County’s fourth- and fifth-largest property taxpayers, respectively, after only Duke Energy, Wells Fargo and Bank of America. And they would have contributed an additional $23 million to the city and county tax base, according to calculations using 2022 assessed values and tax rates.

That’s enough to pay the salaries of 527 entry-level teachers in Charlotte-Mecklenburg Schools or 494 new police officers in Charlotte. In just three years, it would pay for an elementary school on the CMS school bond list.

“Wow. If they’re getting that kind of tax exemption, they need to be held to a higher standard,” said Mecklenburg County Commissioner Elaine Powell. “They continue to benefit from tax exemptions even though they have millions banked away. It’s obscene.”

After hearing the results of the Ledger/N.C. Health News analysis, Mecklenburg County Commissioner Susan Rodriguez-McDowell said she asked county staff for a review of hospital exemptions — especially those on property not used for patient care.

For their part, Atrium and Novant said in emailed responses that they contribute a substantial amount to the community, including millions in free and subsidized care. In addition, Atrium said that it pays property taxes it’s not required to pay:

As it pertains to taxes, it’s worth noting that Atrium Health actually goes above and beyond, in this regard. While we are technically exempt from all property taxes, Atrium Health regularly pays millions of dollars in property taxes — voluntarily. 

Estimated $1.8 billion in tax breaks statewide

The Charlotte Ledger/N.C. Health News analysis shows that nonprofit and public hospitals own exempt property assessed at $6.3 billion in North Carolina’s five most populous counties. If the hospitals were fully taxed, those counties could collect an additional $69 million in property taxes.

In addition to property tax exemptions, hospitals have their income taxes waived, receive millions in local and state sales-tax refunds and can raise money through tax-free bonds. Nonprofit and public North Carolina hospitals received an estimated $1.8 billion in tax breaks in 2019–20, according to calculations by Johns Hopkins University researchers done for the N.C. state treasurer’s office.

Tax exemptions were granted to hospitals nationwide more than a century ago as a way to ensure that they would stay open and continue to serve the poor. The IRS says charitable hospitals can qualify for tax exemption as long as they operate for public rather than private interest and provide community benefits.

Three types of N.C. hospitals

  • For-profit: Pay property taxes like any other corporation. Example: HCA Healthcare, which purchased Asheville-based Mission Health in 2019
  • Nonprofit: Can apply for property tax exemptions on property they use for their charitable purpose. Example: Most large N.C. health care systems, including Novant Health, Duke Health and Cone Health
  • Hospital authorities: Government entities originally created to serve the poor. As units of government, any real and personal property they own is exempt from taxation, and they do not need to apply for exemptions. Example: The Charlotte-Mecklenburg Hospital Authority doing business as Atrium Health

As health care systems have grown into multi-billion-dollar enterprises, however, a growing number of critics in North Carolina and elsewhere say they increasingly resemble for-profit companies and should do more to justify their tax-exempt status.
If you include its earnings from Atrium Health Wake Forest Baptist, Atrium’s total revenue in 2021 was $12.9 billion, according to audited financial statements. In 2022, Atrium combined with Advocate Aurora to become the nation’s fifth largest hospital system, with combined annual revenues of $27 billion.

Novant had operating revenues of $7.4 billion in 2021, according to audited financial statements.

Atrium CEO Gene Woods took home $9.8 million in 2021, while Novant CEO Carl Armato’s total compensation was $4.5 million. Novant and the Charlotte-Mecklenburg Hospital Authority had about $800 million each in reserves in 2021, financial statements show.

“They’re able to reap huge profits, add to their multimillion-dollar reserves and pay their executives millions of dollars, and yet we still have a huge need for more community access to health care,” said Rodriguez-McDowell, the county commissioner.

“Are they really giving the public benefit that they should? I personally don’t see it.”

Rodriguez-McDowell and Powell were the only local elected officials to vote no last year when Atrium asked for and received $75 million in public investment for an “innovation district” that will house Charlotte’s first medical school. (The complicated agreement calls for the city and county to reimburse Atrium with 90 percent of new property taxes from development generated by the project. The district will be mostly taxable, a city spokesman said.)

County commissioners chairman George Dunlap, who appoints members to the hospital authority’s board, said he believes the hospitals justify their exemptions with all they do.

“Both hospitals are a tremendous benefit to our community, especially when you consider that several counties don’t have even one hospital,” he said. “They also put a lot into the community by supporting organizations and programs that benefit the residents of Mecklenburg County.”

Hospitals point to millions in community benefit

In response to questions about tax exemptions, Atrium and Novant said they have invested billions to help the communities they serve.

In a statement, Atrium said it provided $875 million in community benefits in Mecklenburg County alone in 2021, part of a total of $2.46 billion across the system. The health system said community benefit made up 19.1 percent of its operating expenses in 2021.

Atrium emphasized its “generous charity care policy,” which provides free care to uninsured patients with incomes up to 200 percent of the federal poverty level. The hospital also noted that it generates other tax revenue for the state and the economy as a whole:

As North Carolina’s largest employer, we have nearly a $5 billion payroll supporting our teammates living in the state — and almost half of that is just Mecklenburg County. As a result, our more than 58,000 teammates are using those funds to pay their own personal income, property and sales taxes, in addition to the $190 million in annual payroll taxes we pay. (Read Atrium’s full statement here.) 

In written responses to questions, Novant put its community benefit at $464.4 million in the Charlotte market (including the counties around Mecklenburg) and $1.1 billion systemwide.

Novant also highlighted its financial assistance policy — “one of the most generous in North Carolina” — which it said provides free care or care at a reduced price to uninsured patients who have a household income of up to 300 percent of the federal poverty level. “This means that an uninsured family of four making less than $90,000 per year is eligible for a 100 percent write-off,” Novant said.

Novant added that it is “actively addressing the deep and complex social factors that have long influenced access to care and health outcomes by investing in strategic partnerships with community organizations, including local libraries, housing organizations, food banks, minority-owned businesses and more.” (Read Novant’s full statement here.)

Critics question calculations

Critics say hospitals calculate community benefit in a way that’s inflated and includes items that shouldn’t be counted because they have little effect on local community health needs.

For example, 75 percent of Novant’s and 57 percent of Atrium’s community benefit total is what they call Medicaid and Medicare “shortfall.” That’s the difference between what the hospitals say is the cost of care for Medicaid and Medicare patients and how much they receive from the government to treat those patients. Here’s Atrium making that point:

In many regards, we are “price takers” as opposed to “price makers” as it pertains to amounts the government pays for health care services…” As labor, equipment, supplies and inflation continue to drive health care costs higher, the gap between Medicare and Medicaid payments from the government and costs incurred to deliver the quality care we provide has grown in the post-pandemic inflationary environment. Health systems must take what is given them and cannot negotiate the reimbursement rates with the government.

Novant said calculation of community benefit is defined by the IRS, not health systems, and the federal agency’s methodology “acknowledges that the losses incurred by serving Medicare and Medicaid patients correspond to community benefit objectives.”

The problem, according to some health policy experts, is that the IRS does not say how hospitals should define shortfall, so hospitals can base it on their prices. That would mean the higher they set their prices, the higher the value of the care they can say they are donating, even though very few people pay those listed prices. Some researchers have also noted that government reimbursement rates are supposed to be close to the cost required to deliver care.

N.C. Treasurer Dale Folwell, whose office has published a series of reports critical of the state’s hospitals, said “there's absolutely no sunshine and no accountability” when it comes to what hospitals report they are giving back to their communities.

“For these billions of dollars of tax benefits, no one at the federal or state level is looking over this,” he said. “No one is asking the questions.”

Folwell, a Republican, last month announced he is running for governor in 2024. Some hospital leaders quietly complain that he is criticizing large health care companies to further his political ambitions.

A report published by Folwell’s office and Johns Hopkins researchers found that the charity care provided by the majority of North Carolina’s large hospitals equals less than 60 percent of the estimated value of their tax breaks.

Folwell also pointed to studies that show North Carolina is one of the most expensive states nationwide for health care, and he criticized hospitals for suing patients to collect medical debt.

Almost 20 percent of families in Mecklenburg County have medical debt in collections, compared with a national average of 13 percent, according to data compiled by The Urban Institute.

Percent of households with medical debt in collections.
Credit: Urban Institute analysis of credit data from February 2022
Percent of households with medical debt in collections.

Hospital growth comes at a price

Like other large health care systems, Atrium and Novant have been on a buying and building spree in recent decades. It’s part of a national trend of hospitals expanding and consolidating.

As hospitals gobble up land and property, those parcels come off the tax rolls.

Tax records show Atrium, acting as The Charlotte-Mecklenburg Hospital Authority, has added 93 acres in Mecklenburg County over the past decade, bringing its total real estate holdings in the county to about 460 acres.

If you’ve driven around the county, you’ve probably seen some of its growth firsthand: the new, eight-story tower at Atrium Health Pineville, a new emergency department in the Mountain Island Lake area and new medical plazas in Huntersville and Midtown — to name a few examples. In addition, several multimillion-dollar projects are underway, including construction of the city’s first medical school and the addition of a $893 million, 12-story bed tower on Atrium’s main Charlotte campus.

In Iredell County, government officials are bracing for the fallout after Novant Health recently announced plans to purchase two for-profit hospitals there. One was the county’s seventh largest taxpayer.

The two facilities contributed $883,111 in city and county property taxes in 2022, said Iredell County Tax Assessor Fran Elliott. Once Novant applies for exemptions, local budget writers will either have to cut that amount from their budgets or collect more from other taxpayers.

“That’s going to kick us,” Elliott said.

Nonprofit hospitals must prove charitable use

Under N.C. Statute 105-278.8, property owned by a nonprofit hospital like Novant can avoid taxes if it is “actually and exclusively used for charitable hospital purposes.”

That means nonprofit hospitals can be asked to pay taxes for vacant land, but once they build a facility that is providing medical services on the site, they can apply for an exemption.

Over the years, tax officials across the state have occasionally battled with nonprofit hospitals about whether a particular use supports a hospital’s charitable purposes, said Christopher McLaughlin, a professor of public law and government at the UNC School of Government who studies tax exemptions.

In one case that went to court, Moses H. Cone Memorial Hospital in Greensboro was able to get an exemption for a daycare center, arguing that it needed the center to recruit and retain qualified employees.

Should they qualify as nonprofits?

In recent years, tax officials nationwide are more often questioning the first part of the equation: whether hospitals should qualify as nonprofits at all.

In one recent case, a Pennsylvania court ruled in February that four hospitals there should not be exempt from local property taxes because they failed to prove they were operating as purely public charities. In its decision, the court noted that diverting money to employees through “eye popping” excessive salaries and fringe benefits was evidence of a profit motive.

Ge Bai, an accounting and health policy professor at the Johns Hopkins Bloomberg School of Public Health who worked on the treasurer’s charity care report, expects the Pennsylvania case to have a “rippling effect.”

“It sets a precedent for other local and state governments that are interested in pursuing more accountability from nonprofit hospitals, especially those that have accumulated a lot of wealth and profit and have questionable delivery of charity care or community benefit,” Bai said.

UNC’s McLaughlin said N.C. tax officials should ask hospitals to prove they do in fact qualify for exemptions as a nonprofit.

“Just like individuals have to show their federal tax return from last year to qualify for the elderly or disabled homestead exclusion, it seems to me that we should hold nonprofit hospitals to the same standard and say, ‘Show me your financials,’” he said. “That may mean sharing financials and details of their operations so the county can make an appropriate determination to determine if their practices are in fact nonprofit.”

Shows a low white building with a red roof and outdoor area with colorful umbrellas. The building sits on a site owned by Atrium Health.
Michelle Smolowitz
When Atrium purchased the site of this chicken tenders restaurant in 2020, Mecklenburg was denied $9,200 and Cornelius lost $3,300 in annual tax revenue. The health system plans to build a 200,000-square-foot hospital, Atrium Health Lake Norman, on the property.

Atrium’s special status

For hospital authorities like Atrium, it does not matter if a property is being used for a charitable purpose or not. Under state statute, hospital authorities — like other governmental entities — simply have to own the parcel.

“Once they prove they own it, it’s done,” McLaughlin said.

That allows Atrium to receive automatic exemptions on any property it owns, including vacant land, 20-plus homes it owns in Dilworth and the land with the chicken restaurant — all sites that might be questioned if they were owned by a nonprofit hospital instead of a public one.

(Atrium uses the homes to house students or residents enrolled in Atrium Health programs or as administrative offices, a spokesman said. And it is planning to build a 200,000-square-foot hospital, Atrium Health Lake Norman, on the chicken restaurant site.)

“If the Hospital Authority requests that a parcel owned by them become exempt, the County marks it as exempt, per N.C. statute. No further explanation is required,” a Mecklenburg County spokesman explained in an email.

In addition, because N.C. law lets county hospital authorities expand within 10 miles of the county line, the Charlotte-Mecklenburg Hospital Authority (Atrium) also avoids millions of dollars of taxes in Union, Cabarrus, Gaston and Lincoln counties. Some is vacant land the authority has held for years that would likely be taxed if it was instead owned by a nonprofit hospital or a private owner.

In Cabarrus County, for example, the authority owns property valued in 2022 at $416.4 million, including $11.7 million in vacant land. Atrium avoided $5.1 million in property taxes there last year, our analysis shows.

As Atrium pointed out, however, it doesn’t take full advantage of the privilege afforded by the statute.

In its statement, Atrium said it has historically paid voluntary taxes “on properties that aren’t part of a health care facility or its surrounding campus.”

The Ledger/N.C. Health News found that Atrium, acting as the hospital authority, paid at least $840,000 taxes in 2022 on 36 Mecklenburg properties it owns that could be exempt, according to county tax records. Those parcels include the Penguin Drive-in restaurant on East Boulevard, a CVS pharmacy on Johnston Road and two strip centers with Harris Teeter stores.

Atrium claimed in its statement that its voluntary payments amount to nearly 30 percent of what its total Mecklenburg tax bill would likely be if it were fully taxed. However, our calculations using a database of Atrium properties provided by the tax office showed a smaller percentage: 5 percent.

A hospital spokesman said there are two likely reasons for the discrepancy: First, Atrium owns property under names that “may not be easily recognizable as being owned by the hospital system.” In addition, its calculations include taxes it pays through rental agreements with other landowners, while the Ledger/N.C. Health News analysis included only parcels that Atrium owns.

When first asked about properties that Atrium paid taxes on, Mecklenburg County Tax Assessor Ken Joyner said he didn’t know if hospital leaders were willingly paying those taxes to be a good citizen or if they were simply unaware those properties could be exempt.

After the interview, the tax office said in a follow-up email that Atrium had since asked for exemptions on the three specific properties that the Ledger/N.C. Health News inquired about, including one on Mount Holly-Huntersville Road with a Harris Teeter.

For that one, Atrium wants to avoid taxes on the land, but “specifically asked that the retail portion be taxed,” the tax office said.

Atrium unusual among hospital authorities

There are eight other hospital authorities in North Carolina, according to registrations filed with the N.C. Secretary of State. None has expanded the way The Charlotte-Mecklenburg Hospital Authority has.

Michael Fine, a health care attorney based in Louisville, Kentucky, who follows property tax exemption law, said hospital authorities were originally created by local governments to provide medical care for the poor. Even today, they tend to be in rural and low-income urban areas, he said, and most focus on serving the neediest patients.

“For a hospital authority to grow and expand the way Atrium has, that’s rare,” Fine said. “At some point, something got them on the path to being the Pac-Man instead of the pellet. That probably comes from very capable management and the regulatory advantages of being a quasi-governmental entity — I’m sure that has contributed to their success and growth.”

Fine said laws governing hospital authorities vary greatly from state to state. It’s not clear how many other states offer tax breaks for property that is vacant or being used for a non-medical purpose.

“If I were Novant, I would be making people aware of this discrepancy,” Fine said. “I would be having conversations in Raleigh.”

Some governments ask hospitals to pony up

Some state and local governments across the country have enacted legislation asking hospitals and other nonprofits to do more in exchange for their tax breaks.

Illinois, Oregon, Utah and Nevada all require hospitals to meet specific requirements in exchange for their tax exemptions, according to the National Academy for State Health Policy. The Oregon law, for example, sets minimum community benefit spending levels for each nonprofit hospital in the state, requires hospitals to provide financial assistance to those with incomes up to 400 percent of the federal poverty level and creates new medical debt protections for patients.

Other jurisdictions ask hospitals to make payments in lieu of taxes to help cover their costs of providing services.

Boston, for example, asks its largest tax-exempt organizations to make contributions that equal 25 percent of what they would pay in property taxes if their property was taxable. Although the city allows nonprofits to apply community benefit credits for up to half of the assessed payment, the city still received an additional $35 million from those payments.

In New Jersey, after a tax court determined that modern hospitals did not meet the criteria for tax exemption in 2021, lawmakers required hospitals to begin paying their local governments $3 per day for each hospital bed and $300 per day for each satellite emergency care facility.

There is at least one example of a payment in lieu of taxes in North Carolina: The city of Durham collects a $400,000 payment from Duke University to help cover the cost of fire protection, according to the city’s chief financial officer, Tim Flora.

Trying for change in North Carolina

Folwell, served in the N.C. House from 2005 to 2013, said he tried several times over the years to push through bills to cap hospital sales tax refunds or that asked more of hospitals in return for their tax exemptions.

Each time, health care systems fought the changes, he said.

More recently, Folwell has been holding news conferences to support a bill introduced in both N.C. legislative chambers this year called the Medical Debt De-Weaponization Act.

Among other provisions, it would cap maximum interest rates on medical debt, limit aggressive tactics to collect medical debt and require hospitals to provide free care to those whose household income is at or below 200 percent of the federal poverty level.

The goal is simple, Folwell said: “For hospitals to start offering a level of charity care equal to the billions of dollars of tax benefit that they get from this community and this state.”


The Charlotte Ledger/N.C. Health News analyzed county databases of exempt hospital property to determine how much the hospitals would pay in property taxes in each county if they were not exempt. These numbers do not include business personal property owned by the hospitals, which would add millions more to the value of their exemptions.

This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area. For more information, or to support this effort with a tax-free gift, click here.

This article first appeared on North Carolina Health News and is republished here under a Creative Commons license.

North Carolina Health News is an independent, non-partisan, not-for-profit, statewide news organization dedicated to covering all things health care in North Carolina. Visit NCHN at

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