February 9, 2006 | Read Time: 2 minutes
Nonprofit hospitals in Illinois are fighting a proposal by the state’s attorney general that would require them to spend at least 8 percent of their total operating costs on charity care each year to retain their state tax exemptions.
Attorney General Lisa Madigan, who made the proposal last month, said that tax-exempt hospitals — the vast majority of the state’s 200 hospitals — spend less than 1 percent of their revenue to help those who can’t afford their services.
The plan, which has been introduced in a bill in the Illinois General Assembly, also would require nonprofit hospitals to guarantee free or discounted care to low-income people regardless of whether the organizations had already met the 8-percent-spending rule.
The proposed charity-care requirement comes amid increasing scrutiny of nonprofit hospitals by Congress and the courts. The U.S. Senate and House of Representatives are looking into whether nonprofit hospitals provide sufficient services to warrant their exemption from taxes.
Nonprofit hospitals also face lawsuits from patients alleging that they have violated their duty to provide charity care by charging patients who lack insurance far higher rates than they charge people with insurance.
Nonprofit hospitals in Illinois said many facilities that already face financial difficulties would find it hard to spend more on charity care. One of every three hospitals in the state is losing money, according to the Illinois Hospital Association.
What’s more, the organizations said, the amount of charity care they provide should not be the only standard for defining whether they deserve tax-exempt status. Nonprofit hospitals also offer other benefits to the public, such as necessary but money-losing services that for-profit hospitals may ignore, they said. “We subsidize a host of critical services for our community, including physician services, emergency and trauma care, home care, behavioral health, interpreter services and community-based programs,” officials of the nonprofit Mt. Sinai Health System wrote in a letter to the Chicago Sun-Times protesting Ms. Madigan’s proposal.
The bill in the legislature — HB 5000 — is available online at http://www.ilga.gov.
