CHICAGO – Illinois nonprofit hospitals say they provided $4.6 billion in charity care and community benefits in 2010, a number that has risen 26% in five years and is at the center of a debate that could lead to a legislative mandate on uncompensated services hospitals must provide to retain their tax-exempt perks.

Illinois’ 109 nonprofit hospitals contributed the benefits through programs and services, including $561 million in free and discounted care.

The contributions also included $2.2 billion in undercompensated care through Medicaid and Medicare, $445 million for physician education, $266 million to subsidize money-losing services such as trauma, emergency care, neonatal intensive care units and burn units, and $906 million for patients unable to pay their bills.

The figures were detailed in the Illinois Hospital Association’s fifth annual report on community benefits and covers fiscal 2010. The information comes from annual reports the hospitals must submit to the state under the Illinois Community Benefits Act.

“As this report shows, our hospitals go far beyond traditional medical care to enhance the health and well-being of their communities,” IHA president Maryjane Wurth said in the report. “For example, many people are unaware that more than 65 Illinois hospitals are responsible for the ambulance and EMS operations for their communities.”

The overall number is up by 26% from five years ago, when $3.7 billion in benefits were provided. The free or discounted figure rose more sharply by 124%. The association said if all of the state’s more than 200 hospitals were counted, the number would increase by more than $1 billion. For-profit hospitals, however, are not required to file the annual state report. In addition to benefits, hospitals contribute $75.1 billion to the state’s economy annually, the group reported.

Nonprofit hospitals have come under fire in Illinois, with some lawmakers arguing that hospitals are well paid for their services, like a private enterprise, and should do more to help those who cannot afford health care services to warrant their public perks.

The state-level benefits include a property tax exemption and access to the tax-exempt market through the Illinois Finance Authority. The Illinois Department of Revenue in August denied property-tax-exemption applications for Northwestern Memorial’s Prentice Women’s Hospital, Edward Health Services Corp.’s Naperville hospital, and Decatur Memorial Hospital for failing to provide sufficient charity care.

The action marked the first set of rulings on hospitals’ tax-exempt status for property tax purposes since the Illinois Supreme Court in 2010 upheld the state’s rulings that a hospital operated by Provena Health did not provide enough charity care to warrant the exemption. The crackdown does not affect the hospitals’ status as a nonprofit with the ability to issue tax-exempt bonds.

Gov. Pat Quinn late last year asked the department to halt further enforcement actions after the IHA showed a new inclination to engage in talks with the state, including Attorney General Lisa Madigan, over the issue. Madigan had previously proposed legislation that would have set minimum levels for hospitals to retain their tax-exempt perks at the state level, but it stalled. Quinn set a March 1 deadline.

“Talks are continuing, and we are hopeful/optimistic that a fair, workable legislative solution will be worked out soon,” said IHA spokesman Danny Chun.

The crackdown comes at a bad time for hospitals, given ongoing economic pressures and the fiscal challenges posed by federal health care reforms.

Moody’s Investors Service has warned that the property-tax-exemption crackdown could pose a credit threat to the sector here and could force hospitals to cut expenses.

Bank of America Merrill Lynch municipal analysts last year said the market perceives weakness in the Illinois sector with a trading differential between health care credits here and health care bonds as a whole.

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