Urbana forced to pay charity care for huge service region

Urbana forced to pay charity care for huge service region

By Laurel Prussing

Carle Foundation Hospital is a regional medical center that serves 1.2 million people in 25 counties in East Central Illinois and parts of Indiana. The taxpayers of Urbana, a city of 41,250 people — only 3 percent of the region's population — are being forced to pay for much of the charity care for Carle's huge service region.

Senate Bill 2194, passed last year as part of Medicaid reform, allows not-for-profit hospitals to qualify for near total property tax exemption. Most of Carle's property is in the city of Urbana and had been taxable. The loss of Carle's $61 million in assessed value lowers Urbana's total assessed valuation almost 11 percent and shifts Carle's tax burden to every other business and resident of Urbana. It will increase property tax rates in Urbana by almost 11 percent — not only for the city but also for the school district and the park district. (Any taxing district that includes Urbana properties will also see an increase in its tax rate, but at a lower percentage, depending on Urbana's share of its tax base.)

This puts an unsustainable economic burden on the city. Significantly higher tax rates will force Urbana onto a downward spiral, unable to compete for businesses and residents.

Since 2005 Carle has been paying some property taxes. In 2007, Carle sued the Illinois Department of Revenue, Champaign County and the Cunningham Township Assessor over this issue. In 2010, the Illinois Supreme Court ruled that another Urbana hospital, Provena Covenant, did not qualify as a charity because most of its income was from fees for service. Therefore, it was not entitled to a property tax exemption. (A charity is an entity that gets its revenue primarily from donations and gives its services to those in need.)

The Provena case had clear implications for Carle and other Illinois hospitals. In 2012, the Illinois Hospital Association, perhaps the most powerful lobby in Springfield, set about to undo the Supreme Court ruling by changing the definition of charity in state law and giving hospitals a property tax exemption for charity care. The new provision — buried in a gigantic bill to help solve the state's Medicaid finances — greatly expanded the definition of hospital charity. It shifted much of the burden to local governments, who were not given a chance to participate in the drafting of the legislation or to comment on it before its passage. Legislators never heard about the devastating impact on a small city such as Urbana, which hosts two regional hospitals.

Is Carle a not-for-profit charity? According to the "Annual Non Profit Hospital Community Benefits Plan Report" filed with the Illinois attorney general for 2011, Carle claims it provided nearly $16 million in charity care. Carle also paid $10 million in real estate and other taxes. Carle is exempt from both federal and state income tax because it is classed as not for profit. Such tax breaks require providing care for the poor.

Charity care and property taxes have hardly crippled Carle's bottom line. Carle's hefty markups on its services more than cover the costs for health care for the poor and the taxes it paid to Urbana. The hospital's total revenues exceeded expenses by $107 million. For every dollar spent, Carle took in $1.31. Relieving them of $6 million in property taxes would boost their net income to $113 million ($1.34 for every dollar spent — based on 2011 figures.)

Carle's profits far exceed those of most businesses. Does any other business in Urbana get $1.34 for every dollar it spends? Accumulated profits now total $764 million in unrestricted net assets. Its chief executive officer is paid $1.2 million a year. Yet Carle continues to contentiously litigate with local taxing bodies to increase its already incredibly large profit margin.

Carle Hospital can easily afford to pay its fair share of taxes. With three-quarters of a billion dollars in unrestricted investments and a spectacular bottom line, there is no excuse for Carle to undermine and destabilize the city that has provided the foundation of its business for nearly 100 years.

Carle was founded with a $40,000 bequest in 1918 from Margaret Burt Carle Morris to the City of Urbana for the purpose of starting a hospital. Since then Urbana has provided Carle untold millions of dollars for streets, police, fire protection and all other city services. Urbana schools and parks benefit Carle as well. Urbana taxpayers deserve better from the business they helped build.

Laurel Prussing is mayor of Urbana.


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cretis16 wrote on May 12, 2013 at 4:05 pm

There are more people on Welfare in Illinois than
there are people working.

Marti Wilkinson wrote on May 12, 2013 at 6:05 pm

The problem that I have with the argument that Prussing is making is that she is implying that people without medical insurance, or who are underinsured, are responsible for the economic shortfalls that Urbana is now facing. Historically, Urbana has not been very pro-active in attracting business to the area, and the lack of businesses at Lincoln Square is a good example of this.

Additionally, when the WalMart and Meijers were being built, there were stories that came out about residents who complained that the businesses would bring extra traffic and noise to the neighborhoods. Plus, I know people who prefer to live in Urbana, and are willing to pay a higher property tax rate.

Prussing mentions the amount of money that Urbana has invested in the infastructure around the hospital, but what about the fiasco that is the Historic Lincoln Hotel? If Prussing had better competition in the last election, she would have probably been voted out of office. As it is, the residents had to elect the person they saw as being the lesser of two evils.

The reliance on property taxes for services such as public schools is a flawed model that impacts the quality of education nationwide. If we can come up with better ways of funding schools, then property taxes can be better utilized to meet the needs of the residents. It's my understanding that the Urbana School System will be impacted heavily by this, and that is where property taxes will probably end up going up.

Danno wrote on May 12, 2013 at 8:05 pm

I can see the 'skit' now, on the Red Skelton Show. Madigan, with a forearm to Prussings back neck, face into the wall, half Nelson...'pay now, pay later but, pay ya'll must.' A magical labyrinth, it all is...

Englishwoman wrote on May 13, 2013 at 2:05 am

I am writing this from England, scratching my head at what passes for free medical care in the hospitals in Urbana.  A friend has just told me a complete horror story about an elderly neighbour of his (who I will call 'E'), who clearly displays some degree of Autistic Spectrum Disorder, and who has just been sent home to die (from the ICU at Provena), with no palliative care.  This gentleman has an intestinal blockage, something easily treated, but due to the nature of his psychology, is unable even to take on board that being intubated, or having a central line put in is necessary to help save his life and treat him effectively, never mind the operation he also needs to clear the actual blockage.  He can only see that these procedures are scary and painful to him, and refuses to listen to medical advice that he will die if he continues to refuse medical treatment.  This is not surprising for an individual with an autistic spectrum disorder, however the hospital continue to maintain that he is 'decisional', despite him having suffered from this problem for over a month, and been admitted as an emergency several times (he ended up in ICU this last time, having fecal matter pumped out of his lungs, as his body cannot pass it). Now I know that its a difficult ethical decision to make to take someone's right to free choice away, even to save their life, HOWEVER what really amazes me is that the hospital discharged him home from intensive care, knowing he will die, and refused to put Palliative care in place as they say his condition is reversable.  THEY KNOW HE WONT ACCEPT THE CARE HE NEEDS TO SURVIVE, so how can it be reversable in his case?  This man lives alone, so their decision means that his friends and neighbours have to look after a man who will now die in a terrible slow and undignified way, of dehydration, his body filling with fecal matter, and his heart now struggling to cope with the strain on his body.  The National Health Service in Britain is certainly not perfect and its currently creaking at the joints under the cuts the government is forcing on it, however I cannot believe that such an inhumane, appalling decision would be made in my country.  This man has no medical insurance, I wonder what part that made in this decision.  I am truly disgusted at the medical services in Urbana for letting this positively medieval decision stand.

Eric wrote on May 13, 2013 at 2:05 am

I know the man your speaking of and he has been a servant to the people 35 years as a paper boy. I watched Carle and Provina unable to deal with a human that is like a child. He may be  69 years old but his mind is like a child. 

I see another beautiful child of god thrown away by big bussiness and laws.


Marti Wilkinson wrote on May 13, 2013 at 4:05 am

I have an older brother on the autism spectrum, and fortunately both my parents are still alive and able to address many of his needs. My elderly mother spends a great deal of time on paperwork so he can have access to services. If he manages to outlive both of my parents, then the responsibility will most likely shift towards myself. I don't know how England handles hospice type of care but in this area the patient has to agree to it. My uncle passed away in a nursing home because he waited until it was too late for him before consenting to hospice care.

If this individual that you speak of is without family, then I wonder if the court system needs to step in and appoint someone who can function as a guardian of sorts. I would also suggest that the friends of the gentleman contact the Illinois Department of Aging. Since he is over 60 years of age, there may be some services that can help him out.


It is my hope that whoever is reading these comments may know of some additional resources to help this man out.

Sid Saltfork wrote on May 13, 2013 at 1:05 pm

New swimming pool with all of the wanted features, beautification of the Bone Yard creek, restoration of the Lincoln Hotel, construction to Main Street, bike paths throughout the city, sculptures, and other assorted wants and whims has led to Urbana spending beyond the necessary public services.  Now when there is a shortfall; Urbana complains that it is bearing the burden for medical treatment of the poor, and working poor across the East Central Illinois area.

Perhaps, Urbana needs to set up toll booths to tax anyone not from Urbana before they enter Urbana.

sweet caroline wrote on May 14, 2013 at 10:05 am

Right on, Sid!

EL YATIRI wrote on May 14, 2013 at 1:05 pm
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I used to practice medicine in Urbana but quit in disgust 10 years ago.  The hospitals and clinics overcharge as a matter of policy, I was regularly badgered by my superiors to charge more than was fair.  Folks are treated differently depending on insurance, race and social status.  You are fortunate to have the National Health Service in England which is far superior to what we have in the US.

parkmymeterelsewhere wrote on May 16, 2013 at 1:05 pm

The Goad Lady prods again;  She won't be able to afford the boneyard, Lincoln Hotel, and-most of all-the Olympian Drive Project.  Hallelujah.