Many Illinois hospitals receive tax exemptions, but how much do they help their communities? New report takes a look
The hospital on Chicago's West Side spent an average of $78 million more a year on charity care and investing in its community than it saved from tax exemptions given to not-for-profit hospitals, between 2020 and 2022, according to the report from Lown, a Massachusetts-based think tank.
The report also identified Illinois hospitals that have done the opposite — spent less on charity care and community investment than what they saved through tax exemptions. Among the 10 biggest offenders in Illinois are Endeavor Health's hospitals in Evanston, Glenview, Highland Park and Skokie (as a group), as well as Advocate Christ Medical Center in Oak Lawn, Advocate Lutheran General Hospital in Park Ridge and Northwestern Memorial Hospital, among others, according to the report.
'There are a lot of hospitals that actually give back a lot more directly to their communities in meaningful ways than they enjoy in terms of the tax benefit or tax exemption, but there are unfortunately a lot of hospitals that are not, that are in deficit,' said Dr. Vikas Saini, president of the Lown Institute. 'We have a system where there's a lot of out of balance.'
The issue of whether hospitals should receive tax exemptions has been a topic of debate for years with some saying that many not-for-profit hospitals operate like profitable businesses and should have to pay more taxes. Hospital leaders, meanwhile, say they need the tax exemptions to continue to do important work and provide charitable care to patients who are unable to pay.
Nonprofit hospitals receive local, state and federal tax exemptions, but are required to report to the IRS each year how much money they spend to benefit their communities. In Illinois, not-for-profit hospitals don't have to pay property taxes as long as the value of their charitable services is at least equal to their property tax savings. Most hospitals in Illinois are not-for-profit.
The sometimes stark differences between hospitals in the same metropolitan area reflect a pattern in urban markets in which some hospitals with many resources 'are often inaccessible to low-income patients, while 'safety net' hospitals that serve more of these patients operate on thin margins,' according to the report.
Mount Sinai, which serves many patients who are uninsured or on Medicaid, has long been a leader when it comes to spending on charity care and on helping its community, said Dr. Ngozi Ezike, president and CEO of Sinai Chicago. In addition to caring for patients regardless of their health insurance coverage, the hospital also works to help patients such as by paying for their transportation to medical care and giving car seats to new parents in need.
'We are a safety net that doesn't do the wallet biopsy and takes care of everyone that comes through our doors,' Ezike said. 'If we're serious about narrowing some of the gaps that we see between the communities that we serve and much more affluent communities in this very same city of Chicago we need to do more, not less.'
Ezike acknowledged that it can be tough to spend so much on charity care and community support, and that the hospital is running in the red. She said the hospital relies on government funding, grants, philanthropy and corporate partnerships to help fill some of the gaps.
In response to the report's findings, Endeavor Health said in a statement Tuesday that the Lown Institute's methodology 'paints an incomplete and misleading picture.' Endeavor said Lown misrepresents the scope and impact of its work by lumping four of its hospitals together as one, and leaves out certain types of contributions Endeavor makes to its communities. Each of the hospitals surpass the state's requirements for community benefits, according to the statement.
'In 2023, Endeavor Health provided nearly $509 million in total community benefits, including charitable care, medical research, education, and initiatives addressing the social drivers of health,' Endeavor said in the statement. 'The Lown Institute applies a one-size-fits-all approach across nearly 2,000 hospitals that fails to account for local context or system-level investments.'
Advocate Health Care said in a statement Tuesday, 'We remain focused on redefining care for all, contributing $1.2 billion in charitable care and services across the Chicago area annually.' Northwestern Memorial did not respond to a request for comment Tuesday afternoon.
Across Illinois, Lown found that 63% of private, nonprofit hospitals saved more from tax exemptions than they spent on community investment. Lown analyzed data for 140 nonprofit hospitals in Illinois, using data from the IRS and the Centers for Medicare and Medicaid Services as well as municipal property data. Lown looked at more than 1,800 hospitals across 20 states.
In all, Illinois nonprofit hospitals received an average of $2.3 billion in tax exemptions each year between 2020 and 2022, according to the report. During that same time, Illinois nonprofit hospitals spent an average of $1.4 billion a year on charity care and community investments.
The four Endeavor hospitals saved an average of $152 million more a year in tax exemptions, as a group, than they spent on charity care and on community benefit, according to Lown. Advocate Christ saved an annual average of $71 million more in tax exemptions than it spent on charity care and community benefit, Advocate Lutheran saved an average of $68 million more, and Northwestern saved an average of $50 million a year more.
Chicago-area hospitals on the other end of the list – those that spent more on community investment than they saved through tax exemptions — include Franciscan Health Olympia Fields, St. Bernard Hospital and Health Care Center, Holy Cross Hospital and Endeavor Health Swedish Hospital, according to the report.
Olympia Fields spent an average of $16 million more a year on charity care and community benefit than it received through tax exemptions, St. Bernard spent an average of $12 million more a year, and Holy Cross and Swedish hospitals each spent $11 million more a year on average, according to the report.
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