State officials on Tuesday told three Illinois hospitals that they were denied property tax exemptions.
Three Ill. hospitals denied exemptions
Officials from Decatur Memorial Hospital, Edward Hospital in Naperville and Prentice Women's Hospital at Northwestern Memorial Hospital in Chicago, could appeal the Illinois Department of Revenue's decision within 60 days. If hospital officials fail to convince an administrative judge during the appeal, they could later file a lawsuit challenging the decision.
It's unclear how much money the state would receive if the hospitals ever land on the tax roll, said Illinois Department of Revenue spokeswoman Susan Hofer, as the properties have never been appraised. If an Illinois hospital changes ownership, adds a building, changes how property is used or buys land, its tax-exempt status comes under review on the county level. County officials then make a recommendation Department of Revenue Director Brian Hamer.
“We make the final decision: Does this meet the constitutional and legal definition of charity?” Hofer said.
Last year, the Illinois Supreme Court ruled the 202-bed Provena Covenant Medical Center, Champaign, Ill., was no longer tax exempt. The legal proceedings lasted seven years as Provena first challenged the decision in 2002. Hofer said the department is reviewing the exempt statuses of “10 to 15” hospitals. In 2008, the department was reviewing 85 such cases, as the officials hoped the Provena decision would set a precedent. The ruling has done little to answer legal questions.
The department began reviewing Decatur in 2006 after an ownership change. They started reviewing Edward in 2007 after hospital property was newly divided. Review for Prentice also started in 2007 triggered by new construction.
The Illinois Hospital Association condemned the rulings and in a statement wrote they were “deeply concerned” hospital officials needed to “devote precious time and resourced in responding to these challenges.”
“Hospitals are one of the few sectors of the economy creating new jobs and are vital to stimulating the state's economic recovery,” the IHA statement read. “This action threatens the job-creating role of hospitals for Illinois residents.”
The IHA also noted reduced Medicare payments due to federal healthcare reform, citing $8 billion in expected cuts in payments to Illinois hospitals by 2020.
“Losing an exemption could be devastating to an individual hospital—potentially wiping out already thin margins and triggering cuts in the workforce and in healthcare services for the community,” the statement read.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.