Tax implications of UI-Carle venture a concern in Urbana

URBANA — Reeling from higher property taxes, Urbana residents and their mayor have questions about the possible tax implications of a joint Carle-University of Illinois medical enterprise.

The proposal being floated by consultants hired by the UI and Carle is for a new college of medicine to replace the current medical school at Urbana, which is now a regional campus of the UI's College of Medicine in Chicago. It would be independently accredited and overseen by a private, possibly not-for-profit 501(c)(3) established jointly by the UI and Carle. Long-range plans envision a new $100 million building where physicians, students and UI scientists would collaborate on medical education and research projects.

Urbana Mayor Laurel Prussing said she was informed of the discussions that had been going on between the UI, Carle and other members of the business community, but did not participate in those early talks.

"I think it's a fantastic idea, but I don't want to see hospitals get tax-exempt status as a result of this, as a result of being a teaching hospital," she said.

Urbana residents have been especially hit hard by a 2012 state law that grants not-for-profit hospitals a property tax exemption up to the value of the charity health care the hospital provides. That has translated to a loss of millions of dollars in revenue, which is being made up by the remaining taxpayers. Prussing said she is fighting this impact two ways: by counter-suing Carle in court and talking with state legislators about changing the law.

In the meantime, residents like Susan Roughton are wondering how middle- and lower-income residents will survive the increase in their property taxes.

Roughton lives in west Urbana with her husband and two children. She's lived in the community for 19 years and her husband has for his entire life. With property taxes up an estimated 11 percent, she's concerned they may not be able to stay in their house.

"I'm not against (the medical school proposal) or anything. I'm all for growth and development and bringing exciting innovation to our community ... but it shouldn't draw additional resources," Roughton said.

Urbana residents support progress, and it makes sense for the campus to reinvent itself, said Andrew Scheinman, a patent attorney who divides his time between Urbana and Rochester.

But they're also for "vigorous inclusion" and open debates about proposals that affect the public, he said. Scheinman has accused UI and Carle officials of holding their discussions behind closed doors and he recently sent a letter to Chancellor Phyllis Wise, calling on her to hold a town hall-style meeting about the project.

"What Carle does or does not do has a huge effect on Urbana," he said.

Stephanie Beever, senior vice president for Carle Health System, turned aside questions about tax exemptions, saying the proposal is still in its early stages.

Although consultants from Tripp Umbach proposed adding a medical facility in later years, it's not clear that would even be needed, Beever noted. Carle has biomedical research space on the third floor of the Mills Breast Cancer Institute, where it already collaborates with UI researchers, as well as space in the new tower completed last year.

"This is really about people interacting with each other," she said.

Beever and others also said a high-quality medical enterprise would attract top health specialists and researchers, improving medical care and overall quality of life in Champaign-Urbana.

Consultants said the current model, in which the Urbana campus is part of the UIC College of Medicine, supports 215 jobs in the region. Under the model recommended, for an engineering-focused UI-Carle entity, the employment impact could reach 5,600 jobs by 2035 when the program is at "full maturity," according to consultants.

They also projected a $1.4 billion economic impact by 2035 and envisioned an "I-74 Medical Innovation Corridor," in which hospitals and clinics from Peoria to Bloomington to Danville collaborate in various opportunities.

Among the business community, "I think there's broad expectation that it'll be good for the economy," said Craig Rost, the new executive director of the Champaign County Economic Development Corporation. Rost was a longtime development official with the city of Champaign before joining the development corporation.

"Those of us charged with economic development are excited about the possibility of medical-related growth here. It's a potentially very good economic cluster," Rost said.

In Rost's point of view, the blending of engineering, computing and medical expertise "seems like a good fit with high potential for growth here."

In addition to adding employees and bringing in more federal research dollars to the new medical school, there is potential for growth of "affiliated companies," like medical supply companies and insurance companies, office buildings, he said.

"We're all for medical research" and the proposal for an engineering-based medical school could be an economic driver for the region, Prussing said.

"But we can't afford to say they're so wonderful they don't have to pay their taxes," she said.

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45solte wrote on May 05, 2014 at 9:05 am

Hey, Ms. Beever. Who can afford top medical experts when your prices are so ridiculous with current medical experts? What's with the scam of admitting people to the hospital for outpatient office visits and charging hundreds of dollars for the admission, alone (which does not include any billing for actual services rendered)? How do you get away with charging $584 for a 50 minute therapy session for my kid? The extra 'fee' you charge ends up costing me more than the co-payment. $70 or more for an office visit, with insurance? I know Carle doesn't care one crap about the paying people they serve (they're there to essentially pay for the 'charity' care of others), but, you're pricing kids' ongoing mental health services out of reach. You're so darn awesome for this community. And, don't start with the Community Care and payment plan options. Your billing people may as well be bill collectors, as they've got the tactics mastered. At NO other medical facility have I experienced this sort of 'creative' billing. Wonder if it will pass the sniff test with the AG of IL.

puppetsareawesome wrote on May 05, 2014 at 12:05 pm

Couldn't agree with you more, 45solte.  Combining the U of I with Carle is a TERRIBLE idea!  All I can see here is a money-eating hospital sucking more from this town than it already has.  There is a reason why people even with good insurance cannot afford the bills that should cost $40 co-pay end up being around $100 or more when you throw in their double dipping billing.  People need to do something about this on so many levels!

glimmerman2310 wrote on May 05, 2014 at 12:05 pm

Its amazing you all dont realize that all hospital systems the size of carle charge a facilities fee.  OSF does it.  Do I like the idea no but atleast carle is upfront about the charges.  If Laura P keeps going I'm going to take my sales tax dollars and shop in bloomington.  She blames carle for the cities mismanagment of there funds.  Urbana needs to find a new mayor.  The question I have is where would Urbana be without carle?

jms wrote on May 05, 2014 at 4:05 pm

Carle is building these huge facilities, with much wasted space, and those costs are being passed on to us. For my 1500 sq ft, two-bedroom house, I am now taking a hit, because of Carle evading its own property tax, even as it's spending on more and more construction. So now I'm paying more than I make in a month on property tax alone, $4000 per year.

Hope everyone writes their representatives and asks them to repeal the law that enabled Carle hurt its customers so much.

 

45solte wrote on May 05, 2014 at 5:05 pm

Have never paid more than insurance co-pay at OSF. Have never paid more than insurance co-pay at Northwestern. The only nightmare billing experiences have been had with Carle. As for provider-based billing and the alleged 'honesty' of Carle:


'Provider-based billing has become an increasingly common way for hospitals to operate their outpatient facilities because they can cover for extra costs, according to the American College of Physicians.


However, the doctors' organization said it doesn't support provider-based billing for care delivered in an outpatient hospital system-owned practice when the care "is not dependent on the hospital facility and its associated technologies." ' http://insurancenewsnet.com/oarticle/2013/12/17/the-high-cost-of-health-care-a-438182.html


50 minutes of psychotherapy for a kid at the Curtis Rd. outpatient facility is something that has NO dependence on the hospital facility, but, said kid is admitted to the hospital (without ever setting foot in it) so this $270 fee can be billed. The actual therapy bill is separate (and most definitely NOT lower than before 'provider based billing.') I'm sure Carle charges hospital fee for such a service with flagrant disregard of the position statement of the American College of Physicians because they care *so* much about patients and because it's good for us in some way that we're too stupid to appreciate, eh, doc?


 

Skepticity wrote on May 05, 2014 at 6:05 pm

High medical costs are being paraded to engage the public in bashing Carle.  Carle is being used as a scapegoat to distract the public from Urbana's and other taxing districts' poor budgeting.  

Remember this about Carle's tax revenue in Urbana:

*********

Billimack also noted that Carle didn't have to pay any property taxes until about a dozen years ago.

"The local taxing bodies in 2002 denied the property tax exemptions which up to that point had always been granted," said he said. "So it wasn't that we always paid and now we don't. We never paid until 2002, and from 2002 to 2011 we paid under protest. And now we don't have to pay because we received those exemptions because of the 2012 law."

********

Soooooooo...

Urbana has only had this revenue since 2002, and Carle has objected ever since then.  Right or wrong, the law was passed that relieved the tax burden on hospitals providing charity care.  If Carle is making false claims they will have to pay fines.  Watch the paper and see if that is the case.

What has happened is that when the property tax exemption was denied in 2002 Urbana and other local taxing districts pounced on the revenue and spent it all.  They not only spent it all, they incorporated it into their annual budgets.  Despite it being clear that this revenue was going away again, they continued to budget to spend those funds.  They are budgeting beyond their means, funding expensive projects that the local real estate and business taxes could not support. 

So they stick it to the tax payers and say, "Look at that nasty Carle that made us raise taxes by sneakily getting out of paying their fair share!"

Responsible government spends within its means.  It has been clear for some time that this tax revenue that started in 2002 was NOT going to keep on flowing. 

It is the spendthrift habits of the many local taxing bodies that put that extravagant tax bill in our mailboxes.  The Carle tax revenue was a short lived bonus. 

Stop the spending!  Live within a budget!  Stop taxing citizens so you can feel generous! 

Stop trying to build the urban utopia of your dreams with money you don't have.

Chris52700 wrote on May 05, 2014 at 9:05 pm

Exactly! Well said.

Let's blame the instution that's been urbana for many decades for our poor budget decisions.....

Mr Dreamy wrote on May 06, 2014 at 2:05 pm

If you don't like Carle, don't go to Carle. There are lots of doctors in the area, and a few of them are almost as good. Or you could perform your own examinations. Rubbing your head is almost as good as a MRI. And you can perform your own surgery. The "surgeon's knot" is the same one that cooks use. 

Carle takes a legal tax deduction. Carle pays every dime it is legally obligated to pay. To avoid hypocrisy, why don't you skip the personal exemption on your income tax next year? If Prussing doesn't like the law she should try to change it, instead of whining, whining, whining. 

To get your economy back on track, why not reexamine who your local political leaders are? You voted them in to legally collect and spend your money. How are they doing?

Whether on the U of I campus or on the Carle campus, the land is probably already off the tax roll. If it's built in Champaign, great, Urbana residents can drive on over.

And Andrew Scheinman can go stuff it. This isn't about "vigorous inclusion", this is an announcement. 

AMLButler wrote on May 07, 2014 at 1:05 pm

Our property taxes in Urbana have gone up over $2000 in less than 5 years.  We don't have a choice but to move out of this community and leave a home and neighborhood that we absolutely love. We can move just 15 miles or less in either direction and pay the same amount of money for twice the house.  It's not worth it for us to stay and only wait for more increases.

ilmsff7 wrote on May 07, 2014 at 8:05 pm

When Carle paid the property tax, Urbana School District was smart and put that Carle revenue in an escrow account while the question was sorted out at the legislative level and in the courts.  The school district was able to negotiate with the hospital and reached an amicable solution that included the schools being able to keep a portion of the revenue.

The City of Urbana, it appears, has spent all of that Carle revenue in creating a micro-urban utopia.  Urbana is holding out, praying that the courts or legislature rescues them; or they'll have to come up with the money owed to Carle.  In the meantime, the mayor demonizes Carle, trying to, I guess, shame the hospital into voluntarily paying taxes, or trying to whip the legislature into a frenzy.  I don't think that tactic will work.

Common sense and, dare I say, conservative, budgeting by the Urbana would have prevented this.

 

Sid Saltfork wrote on May 10, 2014 at 10:05 am

Conservative, and Urbana in the same sentence.....  The county would be better served if Urbana built a wall around itself.  Of course, Urbana would demand that a state grant pays for the wall. The only danger that Urbana provides is the endless dependence on state, and federal grant money.  Once that dries up, Urbana will dry up.