On August 16, 2011 the Illinois Department of Revenue (DOR) issued denials on tax-exemption applications for new construction at three major not-for-profit hospitals in Illinois—Northwestern Memorial’ s Prentice Women’s Hospital in Chicago, Edward Hospital in Naperville, and Decatur Memorial Hospital in down-state Decatur. The DOR denials do not remove the tax-exempt status of these hospitals. Rather, the denials focus on applications for tax-exempt status for expansions, i.e., new construction, at Prentice, Edward, and Decatur hospitals.
This ruling comes after sustained organizing and lobbying, including a number of meetings with staff of Illinois departments, by members of the Fair Care Coalition for a state-wide solution to the issue of hospital tax accountability. The coalition’s work intensified when the 2010 Illinois Supreme Court decision in the Provena Covenant Medical Center case reaffirmed not-for-profit hospitals’ obligation to provide charity care.
In keeping with our commitment to health care justice, Protestants for the Common Good joined the Fair Care Coalition comprised of health care advocates, faith-based groups, community organizations, and former patients in early 2011. The coalition supports legislation that ensures free or discounted hospital care for all who need it by requiring that all not-for-profit hospitals devote at least 3.5% of their annual revenue to the delivery of charity care, i.e., hospital care for low-income, working families and others who are uninsured or under-insured.
At a press conference on August 17, 2011, the Fair Care Coalition saluted the Department of Revenue for its decision and thanked State Senator Iris Martinez for her leadership. We hope that the DOR decision will bring all Illinois not-for-profit hospitals to the table to discuss a fair way to meet the stipulations of the property tax-exemption law. PCG and others in the coalition will continue to advocate for SB 1881, the Hospital Fair Care Act, introduced—but stalled—in the 2011 session of the Illinois General Assembly. And, in concert with Senator Martinez, the chief sponsor of the bill, members of the coalition will organize a hearing on how to ensure that not-for-profit hospitals that receive property tax breaks provide their fair share of free or discounted care to uninsured patients. While the DOR’s decision is an important step in this initiative, we know that our work is far from over. Stay tuned for further developments!
In March 2010 the Illinois Supreme Court ruled in the Provena Covenant Medical Center v. Department of Revenue case that not-for-profit hospitals must provide charity care, defined as free or discounted care, in order to receive State property tax exemptions. This is not a change for non-profit hospitals. Rather, the ruling upholds the historical obligation of not-for-profit hospitals to provide charity care. The change is that non-profit hospitals can no longer count community benefits (free screenings, etc.), underpayments by Medicare and Medicaid, and bad debt (unpaid hospital bills) as charitable care. The Court did not stipulate how much charitable care a hospital must provide.
Research data compiled by the Center for Tax and Budget Accountability and other groups indicate that a handful of safety-net hospitals are shouldering the cost of caring for uninsured or under-insured patients while other not-for-profit hospitals do little to meet their charitable obligations. Currently, 96% of all hospitals in Illinois have not-for-profit, tax-exempt status, but two-thirds of those hospitals (a total of 137 hospitals) provide less that 2% of their annual revenue on charity care for people in their communities. Only 15 Illinois hospitals invest more than 3% of their annual revenues on health care for the uninsured and under-insured of their communities.