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Hospitals call tax report flawed

Wednesday, May 31, 2006
Daily Herald
by Stacy St. Clair

A controversial new study suggests not-for-profit hospitals in Cook County are taking more in tax breaks than they’re giving back in free health care — and two suburban hospitals are among the top beneficiaries of the difference.

Advocate Health Care and Alexian Brothers Hospital networks receive tax breaks equal to more than three times the amount of free medical care they provide, according to a report released Tuesday by the Chicago-based Center for Tax and Budget Accountability.

“This report wasn’t meant to be a slam on hospitals,” study co-author Heather O’Donnell said. “It’s meant to provide data for an important debate.”

 The Illinois Hospital Association, however, contends the study is politically motivated and does not take into account all the services for which local medical centers do not get reimbursed.

The report was funded by the Service Employees International Union, which has crossed swords with local hospitals in attempts to organize its workers.

“(The survey) substantially ignores the reality of the exemplary work that hospitals do to serve their patients and communities and to merit their tax-exempt status,” association president Ken Robbins said.

The authors deny that politics played any role in the study.

“The union cannot control the data,” co-author Ralph Martire said.

And the data, which examines more than 20 not-for-profit hospitals in the Chicago area, does not reflect kindly on two of the suburbs’ largest health-care networks.

Advocate — which operates Good Shepherd near Lake Barrington, Good Samaritan in Downers Grove and Lutheran General in Park Ridge — receives more than $79 million in tax breaks annually, the report states. The network, however, provides only $20.3 million in charity health care each year.

Alexian Brothers, which includes its flagship medical center in Elk Grove Village in addition to St. Alexius in Hoffman Estates, receives $22.8 million in tax breaks each year but doles out only $5.1 million in free health care, the study says.

Advocate officials did not return calls seeking comment.

Alexian Brothers released a statement saying it remains committed to providing health care to people who cannot afford it.

“The Alexian Brothers Hospital Network is proud of the long-standing bond we have with the communities we serve,” the statement read. “Part of that bond is an inherent promise to be there … for each person who walks through our hospitals’ doors, regardless of their ability to pay.”

The hospitals included in the study contend that the report is flawed because it does not include Medicaid shortfalls or even half of the uncollected debts that local medical centers incur. If the study reflected those numbers, the association says, the free medical services would exceed the tax breaks by more than $100 million.

The study’s authors, however, contend that the state’s definition of “charity” cases extends only to free medical care given to the disadvantaged. Though they acknowledge 50 percent of bad debts are likely connected to impoverished patients, they still did not include it in the study.

“Sending out collection agencies, filing lawsuits and forcing people into bankruptcy — that’s not a charitable act,” O’Donnell said.

The study almost certainly will become part of the ongoing debate about health-care funding in Illinois. Attorney General Lisa Madigan had proposed legislation that would force tax-exempt hospitals to earmark 8 percent of their operating costs for free or discounted medical services.

The proposal went nowhere in the legislature earlier this year, but Madigan’s spokeswoman said her office will be working with the Illinois Hospital Association on a new bill.



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