Not-for-profit Carle Foundation, Urbana, Ill., suffered a blow in a property-tax fight, when a review board urged the Illinois Department of Revenue to deny tax-exempt status to five foundation-owned properties, including the site of 460-bed Carle Foundation Hospital, saying the properties weren't operated exclusively for charitable purposes. The board said one factor in its decision was a 2-year-old change to the foundation's mission statement -- from improving "the health of the community" to improving "the health of the people we serve." Carle Foundation's operations include several healthcare businesses beyond the hospital, among them, a health plan, medical supply company and physician group, the for-profit Carle Clinic Association. At deadline, Carle Foundation officials could not be reached for comment.
The Champaign County (Ill.) Board of Review, in a 12-page report, criticized the foundation's charity-care, pricing and debt-collection practices and alleged that members of the physician group privately benefited from their relationship with the hospital and foundation. "It is our view that no hospital that permits this fundamental unfairness to exist can be considered charitable or tax-exempt," the board said. The state revenue department, which may accept or reject the recommendation, has said it will not act on the matter until an administrative law judge rules in a similar case involving Provena Covenant Medical Center, Urbana. If the department accepts the board's recommendation and the tax-exemption denial survives legal challenges, Carle Foundation would owe $2 million in property taxes annually on the five properties. The foundation also is undergoing an Internal Revenue Service audit. -- by Mark Taylor