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To put it charitably, hospital proposal isn't fair

Wednesday, June 07, 2006
Chicago Sun-Times

There's no argument over whether nonprofit hospitals in Illinois should be required to provide a minimum amount of charitable and other community services to justify their tax-free status. And there shouldn't be any argument that Lisa Madigan, in her capacity as attorney general, has every right to scrutinize hospitals' performance in this area. It's the particulars of Madigan's aggressive campaign to make hospitals more accountable that is open to debate.

The latest development on this issue is a survey -- funded by a union with its own agenda against the hospitals -- that looked at 21 hospitals in Cook County and reported they enjoyed $326 million in tax breaks while making only $105 million in charitable contributions. The only problem is that every reasonable person agrees the survey's focus on a hospital's benefit to a community was too narrowly defined, restricted to just charity care. That myopic viewpoint might be used to support Madigan, who wants to require hospitals to substantially increase their free or deeply discounted care to the poor. A proposal requiring them to contribute 8 percent of operating costs stalled, but armed with this new study by the Center for Tax and Budget Accountability, she may resume pushing a mandatory percentage.

But before legislators rush to judgment, they should consider the sound arguments against the survey's methods in assessing charitable contributions. What also must be taken into account are factors including the Medicaid shortfall assumed by hospitals -- the difference between what the government gives them for treating the poor and the actual costs for that treatment -- and bad debts they assume for patients qualifying for charity care. Then there are other benefits from nonprofits such as the operation of trauma centers.

Imposing a statewide uniform requirement fails to take into account that different hospitals in different locations may need to meet different needs. It isn't fair to judge a big metropolitan hospital by the same standards as one in a Downstate location, or vice versa. Local taxing bodies drawn from the community are best situated to make these kinds of decisions -- after all, we're talking about local property taxes. In fact, there already is a state-required reporting system to help them make those decisions. More than 100 hospitals statewide provide detailed reports of community benefits under the Illinois Community Benefits Act. These reports yield data on charity care, Medicaid care, subsidized health services, and educational, research and volunteer services provided by hospitals. The Illinois Hospital Association compiled the information for 52 nonprofit hospitals in Cook County and found they contributed more than $2 billion in community benefits.

There's no need for the Legislature to mandate a one-size-fits-all standard and usurp local decisionmaking on such a crucial issue as community health-care needs.

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