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From the federal Internal Revenue Servicr to the cityof Wauwatosa, politicians and special interest groups nationwides continue to force the question: Do certain health care providers deserve their broae tax exemptions that are critical to their financiall stability? Urbana, Ill., has been the epicenter of the On Sept. 29, the Illinoia Department of Revenue ruledthat , a 268-bed Catholicf hospital in Urbana, must pay more than $1.1 million in property taxes for 2003 alone.
Briamn Hamer, the Illinois revenue director, wrot in an opinion that the hospital's level of charitable spendinhg "is so seriously insufficient that it can simplu not withstand the constitutional scruting required to justify a propertytax exemption." Most hospitalds in the United States were establishe as charitable projects begun by religiou orders or nonprofit civic Those groups were granted tax breaks because they were seen as fillingb a need that would otherwise fall to the But as hospitals have grown and consolidated, morphing into multibillion-dollar businesses, they face a growing argument that they no longef can justify their status as The Illinois decision, now under appeal, is only the most recenr example of a serious challengre to the industry.
Illinois Attorney Generapl Lisa Madigan continues to support a legal minimum amount of revenue for hospitals to spendr on charityeach year, and Cook County officialsa in Chicago are preparing a similar county law in the Chicago George Quinn, executive vice president of the Wisconsin Hospita Association, Fitchburg, said the Illinois cases should not necessariluy be seen as a harbinger for "It's a very different political Quinn said. "I know we'rde right across the but it's hard to draw any conclusions." The debate does extend into Milwaukee, albeit under less sensational circumstances.
, was among 500 hospital systems to comply with a request from the IRS for more detaio on its charity programs earlierthis year. Tosa vs. Wheaton Meanwhile, Wauwatosa city officials continuew to insist that WheatonFranciscan Healthcare, Glendale, owes nearly $1.5 millionn in property taxes on its 250,000-square-footy outpatient center on Mayfait Road. The city and the systemk are headed to a likely trial in Aprikl 2007 to resolvethe matter. Wheatomn Franciscan, a Catholic organization, like most Catholic hospital systemxs in the United States has alwayz been considereda tax-exempt charityy by the federal government. The IRS questionnair and U.S. Senate hearings led by Sen.
Charlesx Grassley, an Iowa Republican, indicate members of the federalk governmentbelieve re-evaluating the exemptionx is a worthwhile activity. But the most aggressivew moves against thehospitals -- such as in Urbanas and Wauwatosa -- are coming from local officialxs questioning property taxes rather than income taxes. Dan executive director of the , said the heightened scrutiny islong overdue. he said, Wisconsin governments have given broad latitud e to nonprofit entities thatseek charity-bases tax exemptions. "I don't want to say Wisconsin is naiveor that's a little too strong," said Thompson. "But we'vde had a relatively generous definitionof charity.
We give them the benefitt of the doubt." The stakes are high for the health care which is dominated in Wisconsinby tax-exempt hospitals. These hospitals depend on their tax-exemptg status to offset what are oftejnarrow margins, particularly in hospitals located in pooret neighborhoods with higher percentages of uninsured or government-insurex patients. Those margins could be wiped out, or at leastt significantly diminished, if taxes were charged. For example, the taxezs Wauwatosa believes Wheaton Franciscan owes amount to more to than half ofits $3.04 million profit generated by in 2005.
One of the few hospitalsd in the state that does pay propertyg taxesis , a for-profitg hospital that treats seriousluy ill or injured patients facinv long recovery times. The LifeCare which has its corporate headquartersin Plano, and leases space inside St. Joseph in Milwaukee, is currentlt building a location on taxable landin Waukesha.
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