Nonprofit hospital tax breaks criticized

CRITICS EYEING THE TAX BREAKS HOSPITALS RECEIVE: There is a growing chorus of questioning whether nonprofit hospitals and health systems really provide enough free health care to earn the various tax exemptions they enjoy.

Last week, a group of U.S. senators, including Democrats Elizabeth Warren, D-Mass.; Raphael Warnock ,D-Georgia; Chuck Grassley, R-Iowa; and Bill Cassidy, R-Lou., wrote to the Internal Revenue Service and the U.S. Treasury asking the agencies to investigate whether nonprofit hospitals are abusing their tax-exempt status.

“We are alarmed by reports that despite their tax-exempt status, certain nonprofit hospitals may be taking advantage of this overly broad definition of ‘community benefit’ and engaging in practices that are not in the best interest of the patient,” the letter said. 

The lawmakers pointed to cases of nonprofit hospitals charging full price for services that should have been free or discounted. They also said some of these institutions pursued indigent patients for medical debt, including placing liens on their homes.

States and municipalities, including Colorado, Pittsburgh, Penn. and New York City have also upped their scrutiny of nonprofit hospitals.

In April, more than three-quarters of the 1,773 nonprofit hospitals examined by health care think tank Lown Institute spent less on charity care and community investment than the estimated value of their tax break, according to the most recent Fair-Share Spending report. This created what Lown called a “fair-share deficit” of $14.2 billion in 2020.  

The Illinois Health & Hospital Association (IHA) disputes that characterization.

“The health care services provided and activities undertaken by Illinois’ nonprofit hospitals are extensive and provide significant public benefit to their communities that more than offset the property tax exemptions for nonprofit organizations that have been in place for over a century,” Paris Ervin, senior director of media and public affairs for IHA, said in an emailed statement.

“Hospitals treat all who come through their doors, 24 hours a day, seven days a week, regardless of their ability to pay, while bringing tremendous public benefit to the health and well-being of the communities they serve. This investment extends well beyond direct patient care,” Ervin continued.

“In 2021 and 2022, Chicago’s nonprofit hospitals provided more than $2.6 billion in various community benefits, including nearly $200 million in direct charity care,” she said in the statement. “Hospitals provide many critically-needed medical services at a loss, including trauma, burn and neonatal care; free mammography and colonoscopy screenings; vaccinations; mobile medical and dental vans; transportation to and from medical appointments; and nutrition education and healthy, fresh food.”

In addition to paying for and providing medical services, Ervin said in the statement, Chicago hospitals are working to address social determinants of health in the community. And they’re not doing it alone.

“Through partnerships and initiatives, such as HEAL (Hospital Engagement, Action & Leadership), Southland RISE and West Side United, Chicago’s hospitals are engaged across the region through community outreach programming, education activities and wellness and prevention efforts designed to not only improve public health, but reduce economic hardship, provide safe and affordable housing and reduce gun violence,” she said in the statement.

Chicago hospitals that were on the top of the Lown list with charity care deficits include Northwestern Memorial Hospital and University of Chicago Medical Center.

Lown said hospitals with “fair share deficits” had spent less on charity care and community investment than the value of their tax exemption. The Lown list spelled out net income and COVID-19 relief funding from 2020 in their 2023 list. Hospital net income was retrieved from IRS Form 990 from 2020. For hospitals filing with universities where Schedule E was submitted, financial audit or CMS cost report information were used to calculate expenses and net income. COVID-19 relief funding is from CMS Hospital Cost Reports from 2020; this amount includes both grants and loans. The data source for average medical debt by state is the CFPB 2022 report on Medical Debt Burden in the United States.

At Northwestern Memorial, Lown calculated a fair share deficit of $97 million. In 2020, Lown reports that net income for the hospital was $67 million and that it received $18 million in COVID-19 relief funds.

UChicago Medical Center had a fair share deficit of $71 million, Lown said, with a net income of $138 million and COVID-19 funds of $38 million. 

Northwestern Medicine had no comment on the senators’ letter or the Lown report, and pointed to a statement on charity care and tax exemption by the American Hospital Association. 

Also, Northwestern Medicine reported that in its fiscal year ended August 31, 2022 the entire health system provided charity care and community benefits totaling $1.25 billion. The report said its reporting was based on Illinois Benefits Act reporting standards.

UChicago Medicine did not have a comment to the letter or the Lown report. In its 2022 community benefits report, the Hyde Park health system said the system increased its community benefit by 13% over 2021 and that the flagship hospital, University of Chicago Medical Center, provided $586.7 million in benefit.

In 2021, AHA President and CEO Richard J. Pollack took aim at the Lown report’s conclusions. 

“The Lown Institute’s recent report on hospital community benefits fails to account for key areas where hospitals provide community assistance, many of which were spotlighted so acutely during the COVID-19 pandemic,” Pollack said in the statement. “In fact, many of the hospitals that Lown claims fall short on providing community benefits cared for an enormous number of COVID-19 patients and stepped up to meet other community needs because they were in the hardest hit ‘hot spot’ communities during the height of the pandemic.”

The AHA’s Pollack said the report’s “cherry-picking categories of community investment while ignoring others, such as researching life-saving treatments and cures and training and educating the next generation of caregivers,” overlooks critical contributions to the community.

“America’s hospitals and health systems do more than any other part of the health care field to support vulnerable patients,” the statement said.  

This April, Melinda Hatton, general counsel and secretary for the AHA testified before a House Ways & Means subcommittee, saying much the same thing.

CHICAGO HEALTH COMMISSIONER OUT, CHIEF MEDICAL OFFICER RESIGNS AT CDPH: Dr. Allison Arwady’s firing, expected since Mayor Brandon Johnson took office, came Friday, according to multiple sources familiar with the matter. Sources also told Crain’s that Jennifer Seo, the CDPH’s chief medical officer, has resigned, leaving Deputy Commissioner Fikirte Wagaw as acting commissioner.

Arwady, commissioner of the Chicago Department of Public Health since 2019, ushered the city through the COVID-19 pandemic under former Mayor Lori Lightfoot, but Johnson had criticized Arwady’s public health approach and said he would replace her.

The crux of differences between Johnson and Arwady’s public health approaches centered on mental health services offered by the city. Johnson aims to reopen 14 public mental health clinics, a move Arwady was resistant to under Lightfoot’s tenure. Rather than reopening clinics, Arwady has built a network of mental health services, both city-run and community-based. Read more. 

PREVALENCE OF LONG COVID DROPS, NORTHWESTERN DOC SAYS DEMAND STILL HIGH: The Centers for Disease Control & Prevention reported Friday that the prevalence of long COVID among all U.S. adults decreased from about 7.5% during its June 2022 survey to 6% of those surveyed in June 2023. Further, among adults reporting previous cases of COVID-19, long COVID prevalence decreased from 18.9% in the June 2022 survey to 11% in the survey from this year.

Despite the drop, it remains important to stay up to date with recommended COVID-19 vaccination and to plan for long COVID symptom management and health care service needs, the CDC report stated.

The report also noted that drop in the rate of long COVID may not be sustained because, although there was a 1.5-percentage-point drop from June 2022 to June 2023, the figures for long COVID prevalence did not change between January 2023 and June 2023,  so “after an initial decline, long COVID prevalence remained unchanged.”

“The decline during the study period might be reflective of decreasing prevalence of SARS-CoV-2 infection,” the report stated, changes in the severity of acute infection, interventions offered during acute infection (e.g., antivirals), vaccination coverage, or other factors.”

If the prevalence of long COVID is truly dropping, that trend isn’t making itself known at Northwestern Medicine’s Comprehensive COVID-19 Center, says Dr. Igor Koralnik, co-director of the center.

Koralnik said that, just by taking a look on Google for the 2020 census numbers, he figures that 6% of the 2020 adult population is equivalent to 15.5 million people.

“That’s still a lot of people,” he said.

“The reality is,” Koralnik said, “there is still a high demand for long COVID care. Our centers have appointments confirmed months out. We are seeing 100 new patients every month.”

The disease is predominantly a neurological one, he said, as data collected by the Northwestern center shows that 49% of its long COVID patients had neurological difficulties. Extrapolating those numbers, Koralnik said, makes long COVID the third-most prevalent neurological condition in the U.S., behind tension headaches and migraines, but above the numbers of stroke victims and patients with Alzheimer’s and Parkinson’s disease.

In addition, new types of symptoms continue to arise, requiring more comprehensive care, and COVID-19 is not going away, either, he said.

“We still need physicians taking care of these patients and we need to provide multidisciplinary care,” Koralnik said. “It’s not a good idea to let your guard down.”

Nationwide, an uptick in COVID-19 hospitalizations has been reported recently. However, as of the end of July, the Illinois Department of Public Health reported last week that all 102 Illinois counties remained at a low level for COVID-19 hospital admissions as of the end of July. 

ASCENSION JOLIET NURSES PROTEST WAGES, STAFFING, THREATEN STRIKE: The latest health care worker strike threat in the area comes from some 530 nurses at Ascension Saint Joseph Medical Center who issued a 10-day strike notice Friday.

Ascension and the union have been negotiating for more than three months, according to a statement from the Illinois Nurses Association. The union is asking management to improve “deteriorating conditions” at the hospital, such as equipment failures, and to address a widespread understaffing issue.

When Ascension began controlling the hospital, it employed about 800 nurses at the site but that number has dropped to 530 nurses, according to INA spokeswoman Sarah Hurd. Attrition and Ascension’s failure to fill open nursing positions contributed to the dramatic drop, Hurd said.

Aside from staffing issues, the INA says Ascension has violated state labor laws by hiring new nurses, excluding them from the union, and paying them wages above that of unionized nurses.

Ascension did not immediately respond to a request for comment. Read more. 

CANO HEALTH EXITING ILLINOIS OPERATIONS: Membership-based primary care provider Cano Health is exiting Illinois and three other markets, laying off 700 employees and exploring a sale, the Florida-based company said in a press release Thursday.

The plans were disclosed as the company reported a second-quarter net loss of $270.7 million, or 51 cents per share, compared with a loss of $14.6 million, or 3 cents per share, in the same period last year. The company attributed the loss to lower-than-expected Medicare Risk Adjustment revenue.

The 700 people represent 17% of Cano’s workforce, the company said. Around 40% of the layoffs are tied to the company’s pending exit from markets in California, New Mexico, Illinois. and Puerto Rico. The remaining layoffs are part of efforts to consolidate operations. Cano said it plans to exit the three states, where it has a total of 5,000 members and 17 medical centers, by the fall. It plans to exit Puerto Rico, where it serves 8,000 members, by 2024.

OAK STREET OPENING NEW CHICAGO CENTER IN GARFIELD RIDGE: Chicago-based, Oak Street Health plans to open new primary care offices in Garfield Ridge at 6918 W. Archer Ave. on Tuesday.

“We are thrilled to open our Garfield Ridge center in Chicago and begin delivering an unmatched patient experience and improving health outcomes for older adults in the community,” Dr. Francina Peralta-Machado, senior medical director at Oak Street Health, said in a press release.

Oak Street Health, owned by CVS Health, is a network of value-based primary care centers for adults on Medicare.