No negative credit impact from Illinois legislation: Fitch

Legislation in Illinois that would link hospital property taxes to charity-care levels is not expected to have a negative effect on not-for-profit providers in the state, according to Fitch Ratings.

The bill, which Gov. Pat Quinn is expected to sign, would require hospitals to provide at least as much charity care as they'd otherwise be assessed in property taxes. But the legislation also broadens the definition of charity care to include shortfalls in Medicaid reimbursement, subsidies to physicians who treat low-income patients and disease-management and prevention programs.

Fitch described the legislation as providing “long overdue clarity” on how to define charity care and said it is consistent with the standard used in other parts of the country.

It also noted that the action might prompt other states to review how they account for charity care—citing South Carolina, where politicians have recently raised questions about the tax status of not-for-profit and academic medical centers.

Critics of the Illinois bill, which is part of a larger piece of legislation that would raise funds for Medicaid through higher cigarette taxes, have said the move could prompt some hospitals, particularly in lower-income areas, to reduce the amount of charity care they provide.