They say the only certainties in life are death and taxes - but not for many Illinois hospitals that don't have to pay property taxes to their local communities.
A case set to go before the state Supreme Court on Thursday is challenging the law that allows Illinois' not-for-profit hospitals to skip paying property taxes.
Those challenging the law say many not-for-profit hospitals enjoy hefty profits and should have to contribute to their communities, just like any other business. Hospitals, however, argue they provide valuable charitable care and use the exemptions to fulfill their communities' health care needs.
Hundreds of millions of dollars - for hospitals, communities and taxpayers - are at stake. Meanwhile, applications for hospital property tax exemptions have been in limbo for about a year while the courts consider the issue.
"If the law is struck down, then it's going to be a big issue for not-for-profit hospitals across the state," said John Colombo, a tax law professor at the University of Illinois at Urbana-Champaign. "I bet a lot of municipalities and taxing jurisdictions would look at this and say, 'Ah-ha, here's an extra $1 million to $2 million or extra $200,000 or $300,000 that will go toward the school, toward fixing the roads,' and they're going to be aggressive about (getting) that."
About 156 of Illinois' more than 200 hospitals are not-for-profit, including many of the biggest names in health care in the Chicago area - Advocate Health Care, Northwestern Memorial Hospital and Rush University Medical Center.
It's difficult to say exactly how much those Illinois hospitals might have to pay in property taxes if the law is ruled unconstitutional. But a 2009 report by the Center for Tax and Budget Accountability pegged the value of 47 Chicago-area not-for-profit hospitals' property tax exemptions at $279 million.
It's an issue other states are grappling with as well. About half of New Jersey's 64 not-for-profit, acute-care hospitals are in court over the issue after a New Jersey tax court judge's 2015 ruling that a Morristown, N.J., hospital shouldn't be exempt from property taxes because it operates more like a for-profit business. In that case, the judge said that if all hospitals operate like the one in Morristown, then "for purposes of property-tax exemption, modern nonprofit hospitals are essentially legal fictions."
Currently, an Illinois not-for-profit hospital can be considered tax-exempt if the value of its charitable services is equal to or greater than its estimated tax liability. The city of Urbana and others involved in the case, however, argue in the Supreme Court case that the Illinois Constitution allows exemptions only for property used exclusively for charitable purposes.
Many not-for-profit hospitals are actually moneymaking businesses that should have to pay their fair share for services such as police, roads and schools, Urbana argues. Urbana argues that its Carle Foundation Hospital should have to pitch in on taxes.
"The reality is that today's hospitals are not little operations run by nuns who have devoted themselves to living in poverty to help other people," according to a court brief filed by Urbana and others fighting Carle's exemption, including Champaign County and Cunningham Township. "... Today's hospitals are big businesses."
Urbana lost 11 percent of its assessed property value for tax purposes when Carle Foundation Hospital and another Urbana hospital, now called Presence Covenant Medical Center, were relieved of paying more than $6 million a year in property taxes, said Mayor Laurel Prussing.
If Urbana wins the case, it could put its share of the property tax dollars toward hiring five new police officers to fight violent crime, she said.
"We need more police officers to try to nip these things in the bud," Prussing said.
Carle can spare the cash, she said. Last year, a study published in the journal Health Affairs named Carle the 10th most profitable hospital in the country when it came to patient care services, with $163.5 million in profits in fiscal year 2013.
Carle leaders disagree with how that number was calculated because it doesn't include the entire system. Carle says its 2015 adjusted income from operations was $81.2 million - about a 3 percent margin, when the entire system is included. Not-for-profit hospitals don't refer to the money they make as profits or use the term "profit margin." Many call it net income or margin.
Carle's margin isn't excessive and gives the health system the stability it needs to continue providing care to the community, said Carle Chief Financial Officer Dennis Hesch.
Carle provided $30.6 million in charity care in 2015, according to the hospital.
"Dollars paid by a charitable organization in property taxes are dollars that can't be invested in health care and research related to improving the health of the communities we serve," said L.J. Fallon, Carle chief legal and human resources officer.
Hospitals across Illinois feel the same way.
Northwestern Memorial HealthCare was the most profitable hospital system in the Chicago area in 2015, with a profit of $451 million for hospital operations and a 15 percent margin, according to a report by independent health care financial analyst Allan Baumgarten, based on data reported to the federal Centers for Medicare & Medicaid Services.
Baumgarten's reports on Illinois' health care sector are sold to health care professionals, but some hospitals disagree with his analysis.
Northwestern disputes the accuracy of Baumgarten's numbers, because they are only for hospitals, not the entire Northwestern system, and include data for three hospitals that were not part of the system until shortly after fiscal year 2015 ended, said Northwestern spokesman Christopher King.
Still, even without those three hospitals, Northwestern would have been the most profitable system in the Chicago area in fiscal year 2015, according to the analysis.
King said that for the whole system in 2015, net income was $98 million, a margin of 2.6 percent.
The property tax exemption is important to Northwestern, which spent $63 million on charity care last year, King said. "The potential elimination of the Illinois hospital property tax exemption would jeopardize investments in vital community programs, training the next generation of caregivers and breakthrough clinical research," King said in a statement.
Large hospital system Advocate Health Care had about $386 million in profit from hospital operations in 2015 and a 9.7 percent profit margin, according to Baumgarten's analysis.
Like Carle and Northwestern, Advocate disagrees with Baumgarten's assessment. Advocate says in 2015, as a system, it took in $78.6 million more than it spent, which was reinvested back into the system.
Advocate spent $686 million on community benefits in 2015, which include things like charity care and community support and services, Advocate spokeswoman Lisa Lesniak said.
"We are hopeful the Supreme Court will agree that the statute provides a clear and constitutional approach to property tax exemption so we can continue to invest in the health and wellness of our communities," Lesniak said in a statement.
Plus, not all Illinois hospital systems are doing well financially, argue those in favor of the law. More than 40 percent of Illinois hospitals are either operating in the red or on thin margins, said A.J. Wilhelmi, president and CEO of the Illinois Health and Hospital Association.
"Additional pressures such as losing tax-exempt status will put hospitals in difficult positions of having to decide whether to provide a full array of services, lay off staff or put capital improvement on hold," Wilhelmi said.
The hospital association believes the current law is constitutional partly because hospitals are used primarily for a charitable purpose - providing health care to anyone, regardless of ability to pay, said Mark Deaton, association general counsel.
Plus, some say, Illinois cities and schools wouldn't likely get an immediate property tax windfall even if Carle were to lose the case.
Some hospitals might still qualify for exemptions under an old law that says hospitals can get exemptions if they're owned by charitable institutions, Deaton said.
It's also likely that if the law is struck down, municipalities and other taxing jurisdictions that want the tax dollars will likely have to first challenge their hospitals' exemptions with the Illinois Department of Revenue and potentially in court, said Colombo, the University of Illinois tax law professor. It's also possible that some municipalities might choose not to challenge the exemptions because the hospitals might be their largest employers, he said.
Also, in some municipalities, tax levies might remain steady, even with hospitals on the tax rolls. In other words, cities wouldn't actually get more overall property tax revenue, though other taxpayers might have lower bills if hospitals contribute.
It's also possible the Illinois Health and Hospital Association would work with lawmakers to pass a new law defining how hospitals may get exemptions if the current one is struck down. Wilhelmi said the association will "assess all options" once a ruling comes down.
The association worked with lawmakers to pass the current law - that's now being challenged - in 2012. The law was passed after the state Supreme Court, in 2010, ruled against a property tax exemption for Provena Covenant Medical Center, now called Presence Covenant Medical Center.
Many hospitals and municipalities across the state are watching the Supreme Court case closely. The Illinois Department of Revenue last year put a moratorium on issuing any new property tax exemptions for hospitals while the courts deal with the issue. The department now has 95 such applications pending.
Bolingbrook Mayor Roger Claar said he's not sure how much property taxes from his local hospital, Adventist Medical Center Bolingbrook, would help Bolingbrook, considering the city would get only a small portion and the rest would go to other taxing entities, like local schools.
But the premise that the hospital doesn't have to pay property taxes seems unfair to him.
"They have a substantial piece of property that's off the tax rolls and the varying taxing bodies ... are expected to operate public services they don't contribute toward, but they certainly create the need for some of it," Claar said of the hospital.
The Bolingbrook hospital, which had nearly $4 million in profit for hospital operations in 2015 according to Baumgarten's report, said in a statement that it spends far more helping the community than it receives in property tax exemptions. CEO Rick Mace has said in the past that "every dollar tied up elsewhere is a dollar not spent on sick and needy patients."Chicago Tribune's Jennifer Smith Richards contributed. email@example.com Twitter @lschencker