County to hospitals: What are you worth?
Thursday, August 17, 2006
by Gregg Sherrard Blesch
Nonprofit hospitals don't pay property taxes, but the Cook County assessor's office is wondering, "What if?"
Before October, an inspector will visit every tax-exempt hospital in the county and gather information needed to estimate the value of their land and buildings.
The effort is intended to illuminate a long, ugly debate over the public good that hospitals provide and whether they deserve their tax breaks.
In a letter dated June 26, the assessor's office tells hospitals to expect or arrange a visit from an inspector before October.
"This information will be used to produce (an) estimate of value for these properties and the resulting potential tax impact," the letter reads.
The calculations, according to a spokesman, are in preparation for a ruling on an Urbana hospital's tax-exempt status, which the Illinois Department of Revenue yanked in 2004.
The assessor is looking for guidance in the decision on Provena Covenant Medical Center, spokesman Lucio Guerrero said. Depending on the outcome, the county could ask hospitals to reapply for their tax breaks.
"We just want to have the numbers in front of us," Guerrero said.
In May the Center for Tax and Budget Accountability attempted to estimate the value of exemptions Cook County hospitals receive — including all forms of taxes. Its report concluded that the tax breaks dwarf what's given back in free and discounted care for the poor.
The study, billed as independent and completed in cooperation with a Harvard University professor, was commissioned and paid for by the Service Employees International Union.
The hospitals say attacks on their commitment to what's known as "charity care" is driven by unions who want to embarrass hospitals in their bid to organize thousands of workers in the Advocate and Resurrection health networks.
"I think it's a natural consequence of the agitation that comes from organized labor," said Dr. Lawrence Haspel, senior vice president of the Metropolitan Chicago Healthcare Council.
Tom Senesac, regional CFO for the parent company of St. James Hospital in Chicago Heights and Olympia Fields, said the assessor's effort could provide useful information.
"We would hopefully be able to do away with the argument that the numbers are incorrect or correct," Senesac said. "The debate will continue as to what components constitute community benefit."
The unpaid costs of caring for Medicaid patients and unprofitable services such as trauma centers, for example, aren't reflected in what the critics construe as charity, hospital executives are quick to argue.
"What hospitals are providing to their communities ... if you look at it in a meaningful way, far exceeds anyone's reasonable projection of what our tax exemptions are," said Tony Mitchell, Advocate Health Care's vice president for communications and government relations.
Covenant, part of the same Mokena-based company as St. Joseph Medical Center in Joliet, fought to reclaim its tax-exempt status in a hearing before an administrative law judge in December 2004.
The Department of Revenue has yet to announce the decision. A spokesman said he expected an answer "soon" but declined to elaborate.
In the meantime, Covenant has paid $4.2 million in property taxes.