Even as Illinois hospitals wage a publicity and lobbying campaign to preserve their tax-exempt status, the value of their public programs and services declined in 2010 from the year before, a trade association report said.

The hospitals provided programs and services—such as free care and doctor training—worth about $4.6 billion in 2010, according to a report the Illinois Hospital Association issued last week. That total is down about 5% from the $4.86 billion hospitals provided in 2009.

A spokesman for the association said the decline could be attributed to several factors, including the way hospitals report bad debt, meaning bills patients don't pay that aren't classified as charity care.

The value of hospital public benefits has risen 26% over the past five years, the association said. The fifth annual report is intended to tout the broad community benefits provided by not-for-profit hospitals as they seek to preserve their property tax exemptions.

Gov. Pat Quinn has called for new legislation after his Revenue Department in August took away exemptions from three hospital properties, including Northwestern Memorial Hospital's Prentice Women's Hospital in Chicago, in part for not providing enough free care.

Recommendations on the proposed statute are expected to be unveiled in March.

“If we're going to make purposeful, thoughtful decisions about the future of healthcare in this state, we need to be adequately informed as far as what is provided now, what is at stake and what could be lost,” IHA President Maryjane Wurth said.

Putting a value on hospitals' broader community benefits is important because hospital executives say the Revenue Department is too narrowly focused on charity care and doesn't give enough weight to other factors, such as education and below-market reimbursements paid by Medicaid and Medicare.

A Modern Healthcare analysis of information hospitals reported to the Internal Revenue Service for the 2009 tax year shows that the median hospital dedicated 1.52% of its expenses to charity care and 5.87% when the costs other community benefits (but not bad debt) are added to the calculation (Dec. 19/26).

Hospitals are keystones in their communities, providing not only healthcare but thousands of jobs, the report said. In the current economic climate, not-for-profit hospitals can little afford to start paying millions of dollars in property taxes.

In 2010, Illinois hospitals gave $561 million in charity care, a 14% hike from $492 million in 2009, according to the report, which does not include a calculation of charity care as a percentage of expenses or revenues.

Diane Limas, a leader in the Fair Care Coalition, a Chicago-based advocacy group, said the report demonstrates that hospitals need to increase their spending on charity care. “They can sugarcoat all they want,” Limas said. <<

—Crain's Chicago Business, sister publication of Modern Healthcare