Hospitals’ Charity Care May Affect Property Tax Exemptions

By: Ares G. Dalianis and Scott R. Metcalf

The Illinois Supreme Court's decision in Provena Covenant Medical Center v. Dept. of Revenue, which we first discussed in an April 1, 2010 FR Alert, continues to be a hot topic in property tax circles. The issue of how much charity care a hospital provides will likely be an issue in the more than 50 hospital property tax exemption cases pending at the Illinois Department of Revenue as well as in future property tax exemption application proceedings.

In Provena, the Champaign County Board of Review revoked Provena Hospital’s charitable property tax exemption because of the hospital’s highly aggressive methods of collecting bills from poor and uninsured patients. The Illinois Supreme Court upheld the revocation of the exemption after finding that the Hospital’s evidence failed to show that it met the five-factor test for a charity first identified in Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 156-57 (1968). The decision rested in part on Provena Covenant Medical Center’s charity care comprising only 0.7% of its net revenues during the year in question.

The amount of charity care provided as a percentage of net revenue is a statistic tracked by the State of Illinois for every hospital. The Illinois Health Facilities and Services Review Board compiles a wide range of statistics for each hospital in the State and publishes that information on its website. Below is a summary of the charity care provided by some of the largest hospitals in the region as reported in the Health Facilities and Services Board’s most recent publication. Please note that not all of hospitals listed below would be eligible for a charitable property tax exemption. Stroger Hospital, for example, is exempt as a county-owned property. Other hospitals listed below may not be not-for-profit corporations.

Source: Illinois Health Facilities and Services Review Board, Individual Hospital Profiles by Hospital Name, 2008 (available at http://www.hfsrb.illinois.gov/HospProf_ABR.htm)

* Charitable exemption case pending before the Ill. Dept. of Revenue as of May 2010.