March 4, 2004 | Read Time: 2 minutes
A ruling last month to remove the tax-exempt status of a nonprofit hospital could lead to similar challenges at other hospitals, according to the American Hospital Association.
An Illinois state tax panel last month stripped a Catholic hospital of its tax-exempt status. The Champaign County Board of Review, which recommended that the hospital’s tax exemption be revoked, had argued that much of the hospital is used by outside for-profit groups and questioned whether it provides charity care to all those who seek it.
The ruling means that the hospital is no longer exempt from state taxes, but does not affect its federal tax exemption.
As a result, the hospital, Provena Cove-nant Medical Center in Urbana, is subject to $1-million in property taxes this year. The hospital plans to appeal the decision.
The panel’s decision raises the issue of how best to treat the state’s uninsured patients. Provena had made headlines in the state by pursuing an aggressive collection policy, suing and even making civil arrests of people who did not pay the hospital’s bills. The Board of Review cited one case in which the hospital charged a former fast-food worker $34,500 for outpatient kidney-stone removal. The patient was unable to pay his bill, and the hospital demanded a portion of his retirement savings. After the press inquired about the situation, Provena forgave the patient’s debt.
Provena says it has since changed its policies, adding that it provided $2.9-million in health care for the poor last year. In a statement, Provena’s chief executive, Mark S. Wiener, said it was “disheartening” to think that the hospital could be seen as a for-profit entity.
Provena is one of many hospitals around the country that have pursued such aggressive collection policies, and in a letter last fall to the federal Department of Health and Human Services, members of the American Hospital Association said federal law requires them to pursue such collections and asked that the rules be changed.
But in a response delivered two weeks ago to the association, U.S. Health and Human Services Secretary Tommy Thompson said federal law carries no such requirement. He wrote, “I strongly urge you to work with AHA member hospitals to take action to assist the uninsured and underinsured.”
