Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt
In this week’s health care tidbits, Shannon Brownlee and her fellow rebels at the Lown Institute decided to have a bit of fun and compare which non-profit hospitals actually made up for the tax-breaks they got by providing more in community benefit. A bunch of hospitals you never heard of topped the list. What was more interesting was the hospitals that topped the inverse list, in that they gave way less in community benefit than they got in tax breaks. That list has a bunch of names on it you will have heard of!
Given how many of that list run sizable hedge funds and then do a little health care services on the side, perhaps it’s time to totally re-think our deference to these hospital system monopolies. And I don’t just mean making it harder for them to merge and raise prices as suggested by Biden’s recent Executive Order.
Affordable Care Act (ObamaCare) has been knocked for its alleged unintended consequences. The bill’s attracted speculation that workers will lose their health plans, college grads will stop looking for jobs, and even that fewer people will get married.
Those are just the effects related to insurance regulations. Less attention has been given to how hospitals and health systems might change after ObamaCare.
The most common theory is that reform causes consolidation. But what if the effect on hospitals is even more radical? What if the legislation changes the largely nonprofit nature of the industry?
Right now approximately 60% of the 6,000 or so hospitals in the U.S. are nonprofit, while 25% are government-owned. The rest–fewer than 1,000–are for-profit. There’s a reason the pie cuts this way.
Religious groups, especially Catholic orders, opened many of these facilities as charitable institutions. (Ever driven by a hospital with Mercy in its name?)
Then during the post-war infrastructure boom the federal government offered subsidies to cities that wanted hospitals. Getting the money required nonprofit tax status and a promise to provide “community benefit.”
From the Chicago Tribune and AP.
The decisions were announced to the hospitals Tuesday morning, Revenue Department officials told The Associated Press. They follow last year’s Illinois Supreme Court ruling that found a central Illinois hospital wasn’t doing enough free or discounted treatment of the poor to qualify for an exemption, costing it $1.2 million in local property tax payments per year.
In addition to Prentice Women’s Hospital [a Northwestern facility] in Chicago’s Gold Coast neighborhood, the revenue department now has decided that Edward Hospital in Naperville and Decatur Memorial Hospital in Decatur don’t quality for property tax exemptions. The hospitals have 60 days to ask an administrative law judge to review the decisions. In Illinois, property taxes are collected by county governments, and the Department of Revenue decides which institutions are eligible for tax exemptions.
In a written statement, Illinois Hospital Association President Maryjane A. Wurth said she was disappointed and “deeply concerned” by the Revenue Department’s preliminary rulings, and worries that the hospitals will be forced to reduce services and increase costs for patients and employers.
It’s neither surprising nor inappropriate that state policymakers are holding hospitals to account.