Study Shows Hospitals Get More in Tax Breaks than Give in Charity Care

Rockford, IL - Rockfords three hospitals are non-profit, tax-exempt hospitals. "First of all, it means that technically we are obligated to accept patients from the governmental or federal payers which are Medicare and Medicaid," says Bill Gorski, M.D., CEO of SwedishAmerican Hospital. That accounts for 65% of SwedishAmerican patients and means millions of dollars in budget shortfalls every year. "We`re obligated to deliver a full spectrum of services even if financially, say in a for-profit world, it wouldn`t make sense," says Gorski. Thats why they say Attorney General Lisa Madigans attack on Tuesday is so disturbing. A study from the Center for Tax and Budget Accountability has uncovered that several state tax-exempt hospitals receive more than three times as much in tax breaks as they give out in charity care. Madigan called it a "huge discrepancy" and says she will use the data from this study when she proposes legislation to force hospitals to give more free care, at least 8% of their operating costs, to uninsured or needy patients in order to remain tax-exempt. Rockford hospitals, on the other hand, disagree with that study. "What Swedish American gives back to the community far exceeds whatever tax breaks we get," says Gorski. The conflict is between charity care and community benefit. Charity care is when a patient walks into the hospital and is identified as not having the means to pay the bill. "So if a patient comes in and needs deeply involved, deeply involved, highly technical care, you name it, we do it. And we simply eat the cost of that," says Gorski. But often the hospital doesnt learn a patient cant pay until long after treatment. The hospitals forgive those bills but its not defined as charity care anymore. Gorski says thats a few more million that hospitals cannot collect every year. The study also fails to include what they spend on patients with Medicare and Medicaid, as well as community activities they sponsor. "That`s why this is so disturbing, because to characterize what we give back to the community is only this narrowly defined and limited charity care does not reflect the scope of what we do," says Gorski. The IRS agrees. It ruled in 1969 that a hospitals tax-exempt status is proven by community benefit, not just charity care.