CHICAGO - Under pressure to justify their tax-exemption benefits, nonprofit hospitals in Illinois provided more than $4 billion in charitable care and other community benefits in 2006 and agreed to new pricing caps and discounts for the poor and uninsured, the Illinois Hospital Association asserts in a new report.
"As this report shows, our hospitals' programs and services go far beyond medical care to keep their communities strong and stable," IHA president Kenneth C. Robbins said in a statement accompanying the report, which tracked the value of benefits for the fiscal year ending Dec. 31, 2006. "Illinois hospitals make a dramatic difference in the lives of the people they serve."
According to the association's tally, reported under the state Community Benefits Act, hospitals spent $1.88 billion to make up the shortfall in the cost of services versus reimbursement under government-sponsored programs such as Medicare and Medicaid,$1.13 billion in health care services for patients unable or unwilling to pay, and $383 million in free and discounted care.
The report also counts towards the total $346 million to educate future physicians, nurses, and other critical health workers; $271 million to subsidize money-losing services such as trauma and emergency care, neonatal intensive care, and burn units;$124 million for donations, language assistance, and volunteer services; and$85 million in research on new life-saving treatments and cures.
The report also boasts of the economic contributions made by hospitals as being $63 billion a year. As a major employer in the state, hospitals spent more than $12.5 billion in 2006 in salaries and benefits to employ nearly 240,000 people.
The report from the IHA, which represents about 200 hospitals in the state, follows one last year that showed hospitals provided about $3.7 billion in community benefits a year earlier. The association has taken the lead in defending the nonprofit hospital sector in the state from local, state, and federal assertions that some hospitals fail to provide enough free or discounted care to deserve their exemption from property taxes at the local and state level and other benefits, such as the tax-exempt status of their debt at the federal level.
The Illinois Department of Revenue has moved to revoke the property tax-exemption of several hospitals, and state Attorney General Lisa Madigan proposed legislation in 2006 that would restrict aggressive billing and collection practices and require hospitals to spend at least 8% of their operating costs on uncompensated care for the uninsured or underinsured. A compromise was reached on the billing and collection practices, while Madigan's office continued negotiations with the industry on the charity care proposal.
Just the threat of the threshold prompted several insurers to temporarily halt new coverage of state health care bonds and forced the delay of several debt issues, as the IHA warned that passage of the 8% threshold would sink some financially struggling facilities. The original legislation would have also banned hospitals from using the Illinois Finance Authority to issue their debt if they fell short.
As part of negotiations between Madigan's office and the IHA, in April the two sides agreed to the Hospital Uninsured Patient Discount Act, which was approved by the Illinois General Assembly in May. It calls for hospitals to provide automatic discounts to 135% of cost to eligible uninsured patients. The legislation also caps the maximum annual amount that an uninsured patient would pay in a 12-month period at 25% of annual income if he or she does not have significant assets.
The IHA said Illinois is the first state to impose such a cap. Gov. Rod Blagojevich has not yet signed the legislation.
"We are always looking for new and better ways to serve our patients and communities, and we think this is a ground-breaking piece of legislation," said IHA spokesman Danny Chun.
The attorney general's office yesterday said talks are ongoing with the industry over the proposed charity care legislation that would set a minimum threshold for care.