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May 30, 2006
IHA Analysis of Flawed Report on Hospitals’ Tax-Exempt Value and Charity
Care
A report released today (May 30) by the Center for Tax and Budget
Accountability (CTBA) attempts to estimate the tax-exemption values of 21
hospitals and health systems in Cook County and compare them with the cost of
the charity care provided by the hospitals. The report, which was funded by the
Service Employees International Union, uses flawed data that inflate the value
of the hospitals’ tax exemption and ignores the value of the community benefits
they provide. It also fails to take into account the unreimbursed costs of
providing Medicaid services.
While the report uses an inconsistent methodology and incomplete data, it
shows that the hospitals studied provide community benefits worth $1.59
billion – more than five times their estimated tax-exempt value. [The full
report is expected to be available on CTBA’s web site at:
http://www.ctbaonline.org.]
You may receive media calls about the report, and you should be prepared to
talk about the many community benefits you provide to your patients and
communities as well as the aggregate dollar value of those community benefits.
Key talking points include:
The basic underlying rationale for this study – comparing tax-exemption
value to charity care and concluding that hospitals are not meeting their
obligations to merit tax-exempt status is simply wrong.
The correct analysis for tax exemption is community benefits – a
combination of hospital services and activities that contribute to the
well-being of the community.
To decide whether a property is used for "charitable purposes, the
Illinois Supreme Court uses a six-factor analysis, including whether the
entity lessens the burdens of government. Hospitals clearly lessen the burden
of government when they care for patients regardless of ability to pay.
Hospitals are already doing more than their part to serve the poor and
uninsured, and taking away their tax-exempt status would only make it harder
for them to provide critically needed services. Society as a whole must solve
the underlying problem of lack of insurance coverage.
Our hospital is providing a wide range of community benefits, including:
(provide specific examples)
The total value of our hospital’s community benefits is $XXXXX.
The enclosed materials will provide you with further details about the study
and our analysis. They include:
a position paper (click here) with charts showing the hospitals’ tax benefits compared
to total community benefits as well as to their combined charity care,
Medicaid shortfall and 50% bad debt figure (at cost);
a joint IHA/MCHC press release (click here); and
Caring for Their Communities: A
Comprehensive Report on the Community Benefits Provided by Tax-Exempt
Hospitals in the Metropolitan Chicago Region (Metropolitan Chicago
Healthcare Council, 8/07)
Staff Contact: John Bomher: (630)
276-5470 or Sandy Kraiss: (630)
276-5522
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