Treating Uninsured Patients Is Wreaking Havoc On Cook County Finances

It’s a double-whammy for taxpayers: The county’s public health system suffers, while other hospitals enjoy big property tax breaks.

An prescription pad that reads ‘Go directly to Cook County Hospital’
Uninsured? Your doctor might send you to Cook County's health system, which provides most of the so-called charity care in Cook County. Doctors have told WBEZ that patients sometimes show up with discharge papers or even printed Google maps with directions to John H. Stroger, Jr. Hospital. Photo Illustration: Paula Friedrich, Getty Images / WBEZ
An prescription pad that reads ‘Go directly to Cook County Hospital’
Uninsured? Your doctor might send you to Cook County's health system, which provides most of the so-called charity care in Cook County. Doctors have told WBEZ that patients sometimes show up with discharge papers or even printed Google maps with directions to John H. Stroger, Jr. Hospital. Photo Illustration: Paula Friedrich, Getty Images / WBEZ

Treating Uninsured Patients Is Wreaking Havoc On Cook County Finances

It’s a double-whammy for taxpayers: The county’s public health system suffers, while other hospitals enjoy big property tax breaks.

Uninsured? Your doctor might send you to Cook County's health system, which provides most of the so-called charity care in Cook County. Doctors have told WBEZ that patients sometimes show up with discharge papers or even printed Google maps with directions to John H. Stroger, Jr. Hospital. Photo Illustration: Paula Friedrich, Getty Images / WBEZ

When the stress from work gets to be too much and the stabbing migraines set in, Consuelo Vargas takes a day off.

This happens sometimes once a month, she said. Vargas is an emergency room nurse at the Cook County-run John H. Stroger, Jr. Hospital, which has the busiest ER in Illinois.

“Nurses are burnt out like never before,” said Vargas, who has worked at Stroger for nearly six years.

“Sometimes after you’ve worked 12 hours doing the job of two and three people, the next day you have nothing to give,” she told WBEZ recently. “And you’re not doing anybody a favor by coming in exhausted. That’s when you’re going to make a medication error. That’s when you’re going to make a charting error, and someone’s going to get hurt.”

Cook County government’s public health system, known as Cook County Health, treats the most vulnerable people — patients who are already really sick with conditions like heart disease, high blood pressure or diabetes by the time they show up to see a doctor. It’s historically been a destination for the uninsured and, increasingly, for people who can’t afford the insurance they have.

John H. Stroger, Jr. Hospital runs the busiest E.R. in Illinois, often treating those who are uninsured or who can't afford the insurance they have.
Manuel Martinez / WBEZ

Budget woes and staffing issues have plagued the health system before. But the rising demands of providing so-called uncompensated care — treatment Cook County Health provides that it does not get paid for — are wreaking havoc on the county government’s finances. Those financial pressures not only threaten taxpayers’ wallets, but also the quality of care at the health system.

Cook County Health has cut at least 750 vacant jobs, causing a staffing crunch that trickles down to patients. In the ER, there are sometimes not enough stretchers, Vargas said. Almost half of Stroger’s ER nurses are on leave at any given time.

Just four years from now, Cook County officials expect to grapple with a $308-million budget deficit — about two-thirds of that driven by the health system. In the past, smaller budget shortfalls drove county politicians to lay off workers, hike taxes or hunt for new ones, like the short-lived but much-reviled pop tax.

And the uncompensated care problem has only worsened: Cook County Health expects to provide about $590 million of it this year — an 88% jump in the last six years. Charity care, or medical care that doctors typically provide to people who don’t have insurance, is the biggest chunk of that tab, followed by uncollected bills.

Meanwhile, the county’s other nonprofit hospitals have been providing less charity care while enjoying massive property tax breaks. A new WBEZ analysis shows medical centers and their affiliates are getting at least an estimated $390 million in tax relief each year, but it’s likely that untold millions more are being diverted from public coffers. Government records are incomplete, and hospitals calculate their own tax breaks.

The president and CEO of the Illinois Health and Hospital Association, a powerful industry lobbying group, says hospitals earn those tax breaks. They conduct costly medical research and treat patients who otherwise would go to the county.

But county leaders are still looking for ways to pressure other hospitals to kick in more charity care — potentially by legal force.

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“The public system can’t by itself provide charity care for the entire county,” said Democratic Cook County Board President Toni Preckwinkle.

She recently told WBEZ that potential legislation is in the works. It could impact the tax perk hospitals currently receive in exchange for providing certain benefits to their communities.

“We don’t want things like health fairs counted as meeting their requirement” to qualify for tax breaks, Preckwinkle said. “We want them to deliver service to actual human beings.”

Toni Preckiwnkle speaks into a microphone. The Cook County seal is visible behind her.
Toni Preckwinkle presides over a Cook County Board meeting in downtown Chicago in February. Preckwinkle said she backs legislation that would hold hospitals accountable for treating uninsured patients. Manuel Martinez / WBEZ

Why every taxpayer should care about Cook County Health

Cook County Health is one of the largest public health systems in the nation, with at least a million patient visits a year. Besides Stroger on the Near West Side, it includes Provident Hospital on the South Side and a network of clinics. The health system is also in the insurance business, with a Medicaid plan that covers more than 300,000 low-income and disabled people.

But even if local residents don’t find themselves in one of the county’s emergency rooms or doctor’s offices, the financial viability of Cook County Health is in everyone’s interest, fiscal watchdogs say. The system makes up nearly half of the county’s overall $6.2 billion budget.

“From a taxpayer standpoint, an inefficiently run county health system requires more tax revenue from the citizens than an efficient one,” said Laurence Msall, president of the Chicago-based Civic Federation.

The burden of uncompensated care and other fiscal pressures is already causing upheaval at Cook County Health.

The system has lost both its CEO and top financial officer in the last few months. Leaders have put big projects on hold. And the health system’s own board lost some major decision-making power last month when county commissioners voted to give themselves more control over Cook County Health — a charge led by Preckwinkle.

Commissioner Larry Suffredin, an Evanston Democrat, said county leaders will now need another $120 million or so to cover expenses tied to the rise in uncompensated care, like buying more supplies and hiring more staff.

“That’s $10 million a month and that adds up quickly,” Suffredin said. “We’re going to have to come up with ways to cover the expenditure of this money.”

Cook County Health’s interim leader, Debra Carey, warned commissioners in late February that there would likely be more cuts. Carey declined WBEZ’s interview request.

The “disappointing” results of Illinois’ charity care law

Hospitals tend to be economic hubs. They employ hundreds, even thousands of people. Some help homeless patients pay rent. They are paid far less for treating Medicaid recipients than those with private insurance.

In Illinois, there was a push more than a decade ago for nonprofit hospitals to treat more uninsured people in exchange for property tax exemptions. But even after a court battle, there was no clear definition of how much charity care hospitals actually needed to provide.

In 2012, Illinois legislators, the IHA lobbying group and others brokered a deal: Nonprofit hospitals would need to pick from a broad menu of “community benefits” that are worth at least as much as what their estimated property tax bills would be. The menu included things many already did: conducting medical research, treating Medicaid enrollees — or providing charity care.

And there was this: Hospitals would assess the value of their own properties, instead of having local government assessors watchdog the process.

The outside of Northwestern Memorial Hospital
Northwestern Memorial Hospital, located in Chicago’s Streeterville neighborhood, provided 3.6% of all charity care in Cook County in 2018. WBEZ / Manuel Martinez

The new requirements were tucked into another must-pass bill. The day then-Gov. Pat Quinn signed it, he wrote a letter to state lawmakers: “It is my hope that together, [these measures] result in more charity care being provided to the uninsured in our state.”

The opposite happened. Since 2012, Cook County Health has provided more charity care in the region while other hospitals provided less, according to a WBEZ analysis of state data.

In 2018, the county’s two hospitals provided about 55% of all the charity care in the county. The tab totaled about $348 million — 15 times more than the next-highest provider, Northwestern Memorial Hospital, the richest medical center in the county at the time.

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“What has happened is predictable,” said John Colombo, a professor emeritus at the University of Illinois who has followed the charity care battle in the state. “When you have a law that sets a number, that number tends to become the ceiling. Not a floor, but a ceiling.”

In a recent interview, Quinn told WBEZ it’s “disappointing” that the majority of hospitals treat fewer uninsured patients. “I think a review is necessary right now to find out what exactly hospitals are doing,” he said.

IHA’s leader A.J. Wilhelmi said if hospitals have provided less charity care in their communities, they have expanded other services for patients.

“We don’t take our tax exemption lightly, but we certainly feel we earn that tax exemption based on the good work we do in our communities,” Wilhelmi said.

“They told me I had to come here”

It’s not entirely clear what’s funneling so many charity care patients to Cook County Health, but there are several factors besides the 2012 law.

After the Affordable Care Act passed in 2010, more people qualified for Medicaid, so some hospitals now treat more low-income people with insurance than those without. But small hospitals that predominantly treat Medicaid patients can’t afford to take on more uninsured ones, so they might send them to the county.

Even if people do have insurance, many can’t afford their high deductibles. And the state is chipping away at a backlog of Medicaid applications for current and new enrollees. Those people are still seeking care — they just might not be insured at the time.

County health officials also blame a phenomenon known as “patient dumping.” That’s when hospitals refer uninsured patients — some with serious, expensive health problems — to another hospital.

“Here are a couple of examples from last week,” then-Cook County Health CEO Dr. Jay Shannon said during a fiery public speech in October.

He displayed two redacted discharge summaries from patients whom other hospitals had referred to Cook County Health. One patient was in the middle of cancer treatment.

An excerpt from a discharge form shared in a Cook County Health presentation. The first step of the treatment plan reads 'Follow up at Cook County Hospital'

“I want you to understand that these happen every day,” Shannon said.

Despite the public pleas, Cook County Health says it doesn’t track referrals made from other hospitals. A health system lawyer refused to provide WBEZ with the sort of discharge summaries Shannon displayed — even with patient info blacked out — saying such disclosures would be illegal.

But several doctors have told WBEZ that patients sometimes show up with discharge papers or even printed Google maps with directions to Stroger and to the health system’s clinics.

“Why are you coming so far?” Vargas said she asks patients when they arrive in Stroger’s ER from suburbs like Aurora, an hour’s drive away. “Some of them are like, ‘They told me I had to come here.’”

Advocate on tax breaks: “It’s a quid pro quo”

Every dollar hospitals don’t pay in property taxes is a dollar that has to come from somewhere else — namely, other residents and business owners. Experts say when other public and private hospitals provide less charity care, that puts pressure on county government — and taxpayers.

“From my perspective, it is an exchange. It is a quid pro quo,” said Carrie Chapman, with the Legal Council for Health Justice, referring to the tax breaks hospitals receive for providing community benefits.

“It’s critical to our health care safety net that nonprofit hospitals continue to provide exactly that. … Actual charity care for folks who are uninsured and often uninsurable,” she said.

Per the 2012 law, hospitals calculate their own community benefits and property values to justify their big tax breaks. But the law doesn’t mandate outside audits. In fact, it’s unclear what regular scrutiny — if any — state and local officials apply to ensure hospitals are actually earning their tax breaks.

Hospitals here initially apply for tax relief with the Cook County Board of Review. That property tax appeals body then makes its recommendation to a state agency, which has the final say. Hospitals then have to file affidavits each year with the County Assessor’s office saying their property holdings haven’t changed. If they do, hospitals would have to apply for a new exemption.

The IHA hospital lobbying group says the process is transparent. But WBEZ’s investigation found there’s no agency piecing all of this information together to estimate the total value of hospital tax breaks. The picture is incomplete.

WBEZ spent months working with government agencies and found these estimates total at least $390 million. That’s according to records hospitals submitted to the County Assessor’s office for 2018, 2019 or 2020. The majority of the 68 hospitals in Cook County are nonprofit, but data was only available for about half of them. It’s possible that some are not tax-exempt.

And hospitals that received tax exemptions before the 2012 law and haven’t applied for a new one don’t need to file documents that show what their estimated tax liability would be.

Take Rush University Medical Center on the Near West Side, which is part of a system that brought in $2.6 billion in revenue last year. It hasn’t filed documents detailing the estimated amount of its property tax breaks, and a spokesman wouldn’t comment.

The exterior of Rush Medical Center
Rush University Medical Center on the Near West Side spent 1.4% of its $1.3 billion revenue in 2018 on charity care. Bill Healy / WBEZ

The filings also show how lucrative tax breaks can be for hospitals in pricey areas.

In tony Streeterville, Northwestern Memorial and an affiliated doctors group received around $113 million in estimated tax breaks in 2018 and provided benefits to their communities worth nearly three times more.

In a statement, spokesman Christopher King said Northwestern Memorial provides more charity care than any other private hospital in Illinois, but declined to comment further.

Meanwhile, Norwegian American Hospital on the West Side received the smallest estimated tax break, totaling just over $229,000 in 2018. The hospital provided far more in community benefits — $28.5 million.

Wilhelmi, with the IHA, defended the formula hospitals use to estimate how much they would pay in taxes if they were on the rolls.

“They have experts in-house and they often bring in folks from the outside to make sure that that valuation is appropriately completed and submitted,” Wilhelimi said, adding that the formula mirrors an industry standard and has been upheld by the Illinois Supreme Court.

Adrianne Bailey, manager of the Illinois Department of Revenue’s property tax division, said hospitals sign off on the accuracy of documents the state uses to decide the fate of their tax exemptions.

“Without the statutory authority to do so, a county agency is unable to request all of the documents necessary to audit this process,” Cook County Assessor spokesman Scott Smith said in a statement.

“They should be able to help us out with our patients”

While Preckwinkle mulls potential legislation to help buoy the county health system’s finances, she said she’s met with two health systems so far to see what they can do to help. She wouldn’t name them, nor would she describe how the conversations went, beyond “frank and cordial.”

She also hopes to arrange a meeting with Democratic Gov. JB Pritzker.

“The challenges our health care system faces will be on the agenda,” Preckwinkle said.

Meanwhile, another County Board Democrat questions whether hospitals are doing enough to earn their big tax breaks.

Commissioner Alma Anaya, who represents portions of the West Side, said there are too many loopholes in the tax exemption process. Her family uses the county health system for medical care.

“If we’re saving hospitals millions of dollars, specifically in property taxes, they should be able to help us out with our patients,” Anaya added.

Cook County Commissioner Alma Anaya speaks at a February board meeting.
Cook County Commissioner Alma Anaya speaks at a February board meeting. Manuel Martinez / WBEZ

County leaders, fiscal watchdogs and public health advocates ticked off a host of other ideas to chip away at the county’s throbbing financial headache.

Collaborate more with other hospitals. Launch a committee to dig deeper into what is really ailing the health system. Get more money out of the Cook County government budget.

Several commissioners on both sides of the political aisle said they wouldn’t even consider a tax hike to infuse more money into Cook County Health until they had a clearer picture of its finances.

For Dr. Linda Rae Murray, a public health advocate who worked at the county health system for about two decades, there’s a bigger goal in mind: “How can we build a system that can survive another 50 years?”

Kristen Schorsch covers Cook County politics for WBEZ. Follow her @kschorsch.