For years now, legislators have been threatening and posturing over the issue of just how much charity care a non-profit hospital needs to provide to maintain their tax-free status.
In prior years, Sen. Chuck Grassley (R-Iowa) struck fear in the hearts of hospital execs when he toyed with pushing through rules demanding that non-profits dedicate 5 percent of revenues to charity care. To my knowledge, the issue isn’t in play on the Hill right now, though it isn’t dead either.
Since angry comments by Grassley haven’t been making headlines for some time, charity hospitals must have that they were pretty much in in the clear for the moment.
Imagine the dismay a trio of Illinois non-profits must have felt with the state Department of Revenue yanked their property tax exemptions earlier this week.
The ruling, which affects Prentice Women’s at Northwestern Memorial Hospital in Chicago; Edward Hospital in Naperville and Decatur Memorial Hospital, found that the properties weren’t being used for charitable purposes. If upheld, the ruling could cost the hospitals millions in property taxes.
The decision follows another slam in March 2010, when the state Supreme Court upheld a decision by the Department of Revenue rescinding the non-profit status of a hospital which spent 0.7 percent on charity care.
According to hospital records, Northwestern spent 1.85 percent, Edward 1.04 percent and Decature 0.96 percent on charity care.
You know, if you’d been paying attention, guys, the pattern is pretty clear. Spend much below 2 percent of revenues on charity care, you have a target on your head. Maybe you won’t get targeted now, but have no doubt that next time a politician gets hot and bothered over charity care your name will pop up.
And if you think you can beat the rap, consider the Provena Covenant case. The revenue department killed hospital’s property tax exemption in 2004, after noting that it had provide charity care to less than one-half of 1 percent of patients served in 2002. Come on, now. Even my eight year old could have seen that one coming.