Progress Illinois

Private hospitals in Illinois have received their fair share of criticism for taking property tax exemptions with one hand and simultaneously turning away the uninsured with the other. The bad rap is well-deserved; in an April report, the Center for Tax and Budget Accountability (CTBA) found that, in 2008, these facilities pulled in a collective $490 million in tax breaks for serving the poor last year while only providing $176 million worth of care (PDF). To put the figures in perspective, CTBA estimates that the excess tax benefit – $327.2 million – could have been used to provide medical care to an additional 47,836 Illinoisans that year. Meanwhile,  in shirking their obligation to the needy, these private hospitals are adding strain on the same public institutions they are intended to support.

One major problem is that the private hospitals do a dismal job of identifying those patients eligible for so-called "charity care."  The CTBA report details how this results in them racking up "bad debt":

By simply doing a better job of identifying patients eligible for charity care, the Hospitals Studied could have increased the amount of charity care delivered by $109.5 million, at no additional cost to such Hospitals. The Hospitals Studied reported a bad debt cost of $218.9 million. Bad debt is the amount of uncollectible hospital bills. Many hospital finance experts estimate that approximately 50 percent of hospital bad debt is owed by individuals who would qualify for charity care if they were identified for eligibility prior to going through the collections process. Accordingly, better identification of patients eligible for charity care would have increased the amount of charity care delivered by the Hospitals Studied by $109.5 million, with a corresponding decrease in bad debt.

As Attorney General Lisa Madigan's lawsuit against Provena Covenant Medical Center shows, this bad debt often trickles down to the patients themselves.  Rather than receiving the charity care they are eligible for, they find themselves faced with collection agencies:

According to the state’s briefs filed in preparation for Wednesday’s oral arguments, Attorney General Lisa Madigan said Provena billed patients in a manner that “concealed the availability of charity care” and sent poor patients to debt collectors. “These practices undoubtedly prevented needy patients from even applying for charitable care, much less receiving it.”

This trend could soon change in Cook County.

With members of the Fair Care Coalition standing beside him, Cook County Comm. Joseph Moreno (D-Chicago) unveiled the Healthcare Access Protection Initiative (HAPI) Ordinance on Wednesday, which would require the region's private hospitals to either provide their share of charity care or pay up in the form of fees. "Then patients wouldn't have debt collectors after them," CTBA's Heather O'Donnell tells us, "and they wouldn't be facing the prospect of bankruptcy." From a CTBA fact sheet (PDF) on the measure:

Financial assistance requirement. The Ordinance requires all general hospitals operating in the County to provide financial assistance to poor and low-income uninsured patients. Individuals earning 200% of the FPL or less must be provided care at fully-reduced charges; individuals earning between 200% and 400% of the FPL must be provided partial financial assistance.

Fee for failure to provide financial assistance. Hospitals subject to the Ordinance must provide financial assistance at least equal to 4.5% of total hospital expenses. Hospitals not meeting this standard are required to pay the County a fee equal to the difference between the cost of financial assistance provided and 4.5% of the hospital’s total expenses. All fees are paid into a newly created special fund to cover the cost of the regulation.

Under the proposal, safety net hospitals (which care for a disproportionate number of uninsured patients) would be required to spend 2.3 percent of their total hospital expenses on charity care.

Considering that even before the recession, a staggering 17 percent of Cook County residents -- 785,000 people -- were uninsured, there's no question that the additional care would bring relief if the new rules are indeed enacted by the 2011 target. Still, the measure is no substitute for comprehensive reform.