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Charity Hospitals Getting More Than They Give: Report

First Posted: 05/11/09 06:12 AM ET Updated: 05/25/11 02:15 PM ET

Hospital

A new report by a tax policy group says Chicago-area nonprofit hospitals get more in tax breaks than they give in charity care.

The analysis released Friday by the Chicago-based Center for Tax and Budget Accountability says the 47 hospitals included in the study get an estimated $489 million each year in tax exemptions.

The same hospitals provide $176 million in free or reduced-cost health care to the poor annually.

Federal law requires hospitals to provide a community benefit in exchange for federal income tax exemptions, a broad standard that includes charity care. Illinois requires tax-exempt hospitals to provide charity care in exchange for property tax and sales tax exemptions, but a level of charity care isn't defined.

"There are definitely holes in the law," said Heather O'Donnell, lead author of the new report.

The Illinois Hospital Association and the Metropolitan Chicago Healthcare Council are questioning the report's methods.

Adding just half of patients' bad debt to hospitals and underpayments from Medicaid would bring the hospitals' contribution to $600 million, the groups said in a statement.

In addition, the new study overestimates how much hospitals get in tax breaks, said Howard Peters, senior vice president of the state hospitals group.

"Hospitals by themselves can't solve the whole uninsured problem, which is growing with the downturn in the economy," Peters said.

The state hospital group supports mandates requiring everyone to have health insurance as long as insurers are required to accept all customers regardless of their health, he said. Massachusetts has implemented similar reforms, achieving coverage for nearly all its citizens although rising health care costs continue to be a problem.

O'Donnell said hospitals need to do better at identifying patients who can't afford care, rather than turning over unpaid charges to collection agencies.

"Illinois courts have said emphatically that bad debt is not charity," O'Donnell said.

The report found seven hospitals gave more in charity care than the value of their tax breaks. Those hospitals, all in Chicago, were Holy Cross, Loretto, Mount Sinai, Roseland Community, St. Anthony, St. Bernard and South Shore.

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On the Net:

Center for Tax and Budget Accountability:

http://www.ctbaonline.org

Illinois Hospital Association:

http://www.ihatoday.org/

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Filed by Ben Goldberger  |