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Hospitals Oppose Charity Requirement Attorney General Pushes Legislation, Says Many Don't Do Enough

Posted on: Friday, 17 February 2006, 21:00 CST

By Jake Griffin Daily Herald Staff Writer

Area hospitals went on the offensive Wednesday after a controversial proposal requiring them to provide more free or discounted health care edged a step closer to becoming state law.

Six Democrats on the House health care availability and access committee approved the measure, while the five minority Republicans voted against it Tuesday night.

"The legislation is flawed in so many ways. It's not just the mandate; it's several mandates that would cripple the hospital industry," said Danny Chun, a spokesman for the Illinois Hospital Association, which represents more than 200 facilities.

The proposal would require hospitals to put aside 8 percent of their annual operating costs for charity care. Chun said that represents $739 million from all Illinois hospitals.

Attorney General Lisa Madigan pushed for the legislation, complaining that private non-profit, tax-exempt hospitals were not living up to requirements of their tax-exempt status.

"For Illinois hospitals that choose to take advantage of the lucrative benefits of tax exemption, Illinois law requires they operate exclusively for the welfare of Illinois residents," said Anne Murphy, senior counsel to the attorney general.

Officials at Naperville's Edward Hospital hastily put together a morning conference call to outline their objections to the measure and showcase the charitable work the hospital has done.

Last year, Edward spent $3.4 million on charity care and $4.6 million in Medicaid shortfalls - which would be credited toward the overall 8 percent - and that accounted for 2.1 percent of its annual operating expenses. To match Madigan's request for 8 percent would take another $22.4 million, Edward spokesman Brian Davis said.

It also would knock the hospital's bottom line into the red, forcing it to operate with a $7 million deficit.

Davis also pointed out the hospital accrued another $6.5 million last year in bad debt.

Murphy said some bad debt would be credited in this proposed legislation.

The push for more charitable care comes as more scrutiny is placed on hospitals' tax-exempt status. The tax assessor in Champaign County revoked the exemption for two hospitals there, Murphy said.

Davis said Edward Hospital has not examined what it would mean to its operation to give up its tax exempt status to avoid this proposed mandate.

He said Edward's community benefits programming, which includes $500 million in capital expenditures in the next five to seven years, should count toward charitable care.

"Hospitals run a lot of services that lose money that are there for the community benefit," Chun said. "That's why there is no one formula that will fit every hospital across the state."

Murphy said the proposal would better define charitable care to specify the money go toward patient care and not capital projects.

"Charity care should be at least as important as building a new hospital in Plainfield," Murphy said.

If hospitals don't provide the 8 percent in a year, the remainder would be added to a special fund to be divvied up for charity care that was delivered elsewhere, Murphy said.

Murphy said there is still time to negotiate.

"The attorney general very much looks forward to continuing a good-faith dialogue with the hospital community to make sure this bill not only sets those clear standards, but to make sure it is fair and reasonable as applied to hospitals," she said.

Source: Daily Herald; Arlington Heights, Ill.

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