Hospitals battle county on care for the poor
Monday, December 14, 2009
by Maura Possley
South suburban hospitals have united against a push to
regulate the amount of free care they provide to poor patients. A
proposed ordinance before the Cook County Board would require that
hospitals devote a certain percentage of their operating expenses to
charity care. Hospitals that don't meet the required threshold would
pay fees that would go into a fund that would benefit the county's
That system - which includes Oak Forest Hospital
and Stroger and Provident Hospitals in Chicago - long has borne the
brunt of caring for the uninsured and underinsured.
(private hospitals) don't have much incentive to take care of the
people without insurance," said Dr. Srinivas Jolepalem , an attending
physician at Oak Forest Hospital.
Hospitals say they already provide enough charity care to earn their tax-free status.
By law, hospitals must treat any patient who walks into an
emergency room regardless of their ability to pay. But some are treated
up front as charity care while others are billed later and, unable to
pay, fall into the bad debt category. Certain needy patients unable to
pay see those debts forgiven.
Hospital administrators said in trying to meet thresholds for free
care and avoid paying fees, they would be forced to cut elsewhere.
"Instead of broadening the access to care, it could really threaten
the access to health care by forcing the cutting of many of the
community benefits programs that we do provide at all of our
locations," said Nate Llewellyn, communications manager for Advocate
Health Care, parent of Oak Lawn's Christ Medical Center and South
Suburban Hospital in Hazel Crest.
Advocate - the state's largest hospital network - stands to lose the
most. It has the lowest figures for charity care of Southland
hospitals, according to the Center for Tax and Budget Accountability, a
nonpartisan fiscal research group that studies taxes, spending and
Called the Healthcare Access Protection Initiative, or HAPI, the
proposed ordinance would mandate hospitals spend 4.5 percent of their
annual operating expenses on charity care. Safety-net hospitals, which
see disproportionate numbers of Medicaid patients, must provide 2.3
Hospitals with an annual operating margin below 2 percent would be exempt from the charity care threshold.
Ingalls Memorial Hospital in Harvey is one such hospital. When it
closed its books for 2009 in September, its operating margin was 0.1
percent, said Kurt Johnson, its president and chief executive officer.
The ordinance thresholds were calculated using figures for average
annual charity care provided by hospitals in the county, plus adding in
half of each hospital's so-called "bad debt," or hospital bills that go
unpaid for certain needy patients.
Proponents of the ordinance want hospitals to do more to
identify patients who can receive charity care when they are treated
instead of billing them and forgiving debt afterward, said Heather
O'Donnell, of the research group and a member of the county hospitals
"For hospitals that's an accounting issue," she said. "The point is
for the hospitals to get a charity care plan in place rather than debt
collection. To a patient, it makes a world of difference."
But Southland hospital administrators said it's a more difficult
problem than accounting. Determining charity care means assessing a
patient's income, assets and other financial information, they say.
Also, many patients decline charity care because of stigmas or, in
the case of undocumented immigrants, out of fear they'll be deported,
said Kevin Scanlan, president and chief executive officer of the
Metropolitan Chicago Healthcare Council, which is lobbying against the
proposed charity care ordinance on behalf of private hospitals.
Executives of Ingalls Memorial in Harvey, Little Company of Mary in
Evergreen Park and St. James - with campuses in Olympia Fields and
Chicago Heights - said the proposal opens up the possibility the county
could increase the charity care requirements further, resulting in
hospitals being fined, to gain more tax revenue.
"Once these programs are in place, they expand in scope and depth," Ingalls' Johnson said.
O'Donnell could not provide an estimated amount the county could
stand to gain under the ordinance. The Chicago Healthcare Council
estimates the ordinance would cost its member hospitals in excess of
If national health care reform is passed - presumably insuring the
millions of Americans without coverage - hospitals say the ordinance
would leave them scrambling to meet the charity care thresholds to
Reform also could expand programs such as Medicaid and Medicare,
which reimburse hospitals at a lower rate than private insurers,
hurting their bottom lines, administrators said.
"This kind of a tax takes a hospital like Little Company of Mary and
pushes it to the point where we're no longer making an operating
margin," said Dennis Reilly, its president and chief executive officer.
O'Donnell maintained reform wasn't a guarantee the problem of the
more than a million without coverage in the Chicago area would vanish
"The thresholds were set so that they are very achievable so that
every hospital could meet the threshold if they chose to do so," she
said. "I think hospitals don't want to be regulated."
THE HEALTHCARE ACCESS PROTECTION INITIATIVE
The proposed ordinance would mandate hospitals spend 4.5 percent of
their operating expenses on charity care. Safety-net hospitals, which
see disproportionate numbers of Medicaid patients, must provide 2.3
Fees paid by hospitals not meeting the standards would go into a
health fund to benefit the county's massive and cash-strapped hospitals
system, including Oak Forest Hospital, that bears the brunt of caring
for the uninsured.
Regulations would be phased in over four years, with 2011 being the
first year hospitals face standards of 1 percent of charity care for
safety-net hospitals and 1.5 percent for others. In 2012, that bumps to
2 percent and 3 percent, respectively, before full implementation the
Hospitals with annual operating margins below 2 percent would be exempt.
The ordinance would sunset in 2016.
The ordinance, sponsored by Commissioner Joseph Moreno (D-Chicago),
could be put to a public hearing early next year. Southland
Commissioners Joan Murphy (D-Crestwood) and Deborah Sims (D-Chicago)
said last week they planned to vote against it.
Under the proposed ordinance, hospitals would have to spend 4.5
percent of their annual operating expenses on charity care or face
fees. That threshold was created by factoring in average charity care
costs and half of hospitals' bad debt, or the bills that go unpaid by
certain indigent patients.
In 2008, based on their annual expenses, here is what south suburban
hospitals spent on charity care, according to the Center for Tax and
• St. James Hospital, Olympia Fields and Chicago Heights: 3.4 percent of operating expenses devoted to charity care.
• Ingalls Memorial Hospital, Harvey: 3.1 percent charity care.
• Little Company of Mary Hospital, Evergreen Park: 1.6 percent charity care.
• Palos Community Hospital, Palos Heights: 1.4 percent charity care.
• Advocate Health Care Network, parent of Christ Medical Center in
Oak Lawn and South Suburban Hospital in Hazel Crest: 0.9 percent
A storied history
Though the regulations on charity care are a first before the Cook
County Board, the issue long has been debated in the medical community.
Community advocates say hospitals should be required to meet standards to earn their property tax exempt status.
Hospitals counter they already earn their tax-free status, providing
millions of dollars in free care. They say charity care is a narrow
definition of care that leaves out services provided in the community
such as health screenings and educational programs.
In 2006, Illinois Attorney General Lisa Madigan tried to impose an 8
percent level of charity care on hospitals, far above levels they were
Nationally, fees on hospitals that didn't provide enough free care
also once were considered a way, in part, to finance health care
reform. The idea didn't last.