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What Makes a Non-Profit?
The News-Gazette reported Friday that the Champaign County Board of Review is recommending the state deny Carle Foundation Hospital's request for tax-exempt status. Local conservative blogger IlliniPundit sees this as just another example of anti-business sentiment in the County. I see it as a legitimate finding based on the evidence.
Carle spends about $1.3 million each year on charity care. While that is real money, it’s only 0.5% of their annual revenues. The other 99.5% is going towards non-charitable costs. Another example of Carle’s charitable nature is their habit of charging low-income uninsured customers their highest list prices.
I would certainly prefer to see Carle spending more of its revenue on charity care. It’s a real way to give back to the community. While it’s true that $1.3 million isn’t peanuts, does it qualify Carle as a non-profit organization? Of course not. They made $33 million profit on $312 million of income in 2003.
Carle is a for-profit company, plain and simple. Think of it this way: if I staked a sign in my yard and called myself a church so I didn't have to pay property taxes, would you be interested in whether or not I actually was a church?
Health care is costing a fortune (and rising) in this country. Some of the costs pay for doctors, nurses, beds, MRI machines, heat, and other tangibles directly related to patient care. However, another big chunk is administrative costs for health insurance companies, CEO salaries, and profit for the shareholders. The United States spends more money per person than any other advanced country, yet our citizens die sooner than countries that spend half as much as we do. Everyone’s health premiums have gone up in the last several years, and the state’s budget woes owe a lot to increased health care costs. Are doctors, nurses, and other health care workers seeing huge wage increases, or is that extra money going to the insurance companies?
Spending 0.5% on charity doesn’t make Carle a charitable company. Their decision as a corporation to provide charity care may very well be a business decision designed to save them money by getting a tax exemption (for example, it saved them $700,000 in 2003). I would expect they'll now either start providing more charitable care (in order to change people’s minds on their status), or they'll stop providing it and start paying taxes.
Either way, it's the bottom line that counts for them, and there's no reason we should be making up for their disinterest in paying property taxes. If Carle does end up paying $2 million/year in property taxes, perhaps Urbana can spend some of that on Frances Nelson and/or other subsidies for low-income health care in the community.
Posted on April 24, 2005 12:32 AM
Comments
I had a similar thought on how Urbana might apply the 'new' Carle property taxes. Taxes are split into pieces, though, so recombining them under a single governing authority may not be feasible.
Posted by discursive1 on April 26, 2005 03:46 PM
That's a good point, and I should have remembered it. The city's share of one's property tax bill is relatively low (well less than 50%--probably more in the 20% range). That would still leave enough to put together some sort of low-income health assistance program, but might not be enough to cover potential lost services.
It would be a huge boost ($1 mil/year) for the Urbana School District.
I'll try and lookup the percentages this eve.
Posted by cv on April 26, 2005 05:19 PM
Hey!
Just saw some pics of you at the City Council meeting... v cool.
Hope you and yr spouse are doing well. Over here in East Urbana, everyone is fine...
Posted by Lisa B-K on May 5, 2005 09:56 PM
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