Chicago Sun-Times Editorial: Nonprofit hospitals skimping on charity

Chicago Sun-Times Editorial: Nonprofit hospitals skimping on charity
Copyright by The Chicago Sun-Times
March 22, 2010
http://www.suntimes.com/news/commentary/2115068,CST-EDT-edit22a.article


Providing free or discounted medical care to low-income uninsured people is supposed to be the reason nonprofit hospitals get generous tax breaks, while for-profit hospitals don't.
Some Chicago area hospitals, though, are not doing nearly enough to justify their tax-exempt status.

In 2008, according to state records, more than a dozen non-profit hospitals here spent less than 1 percent of their total revenue on charity care for the poor.

With that pinch reality in mind, we can't help but praise Thursday's decision by the Illinois Supreme Court smacking down a Downstate hospital.

The court ruled that the Illinois Department of Revenue was within its rights to revoke Provena Covenant Medical Center's property tax exemption for 2002 because the Urbana hospital had provided too little free or discounted care to qualify as a charitable organization.

To be exact, only 302 of 110,000 patients Provena served in 2002 received charity care. And the value of those services amounted to just 0.7 percent of the hospital's revenue.

The justices also found that the hospital didn't do enough to advertise its charity care, while aggressively going after unpaid bills.

Our hope is that the Supreme Court's decision revives debate in Springfield about setting a minimum requirement for how much hospitals should spend on charity care -- a minimum that is not unreasonably burdensome for hospitals, but improves access to health care for people who need it most.

Hospitals are quick to argue that they spend more on caring for the poor than what's defined as "charity" care. They're also hit financially by the Medicaid/Medicare shortfall -- the difference between what the government gives hospitals for treating the poor and the actual costs for that treatment -- and by the bad debts they assume for patients who later fail to pay.

But the law is clear: Charity is the basis for local property tax exemptions, not Medicaid shortfalls for which hospitals are already eligible for federal tax relief.

And while the court didn't specify how much free care hospitals must provide to qualify for the tax breaks, Thursday's ruling sends a clear message that nonprofit hospitals shouldn't expect millions in tax relief unless they can prove they deserve it.

That's an especially important message at a time when Illinois is bleeding red ink and can ill afford to forsake tax revenue without getting something valuable in return.