A blog focusing on politics in Central Illinois.

Monday, May 09, 2005

How much profit is enough?

Recently on the Jackson File a slew of comments has been flying back and forth about DMH and events happening about it. This opened my eyes up to certain facts I was unaware of, one being that most of DMH's property is exempt from property taxes, and two as a non-profit organization it is exempt from income taxes. Below is a table comparing the yearly profit of not-for-profit DMH vs. the yearly losses of St. Mary's, a not-for-profit as well, over a 4 year period.
DMH profits:
1999 +$19,430,490
2000 +$14,288,225
2001 +$9,233,667
2002 +$5,703,584
Total DMH profits+$48,655,966

St. Mary’s losses:
1999 -$4,113,192
2000 -$2,872,896
2001 -$310,693
Total St. Mary’s losses- $14,916,406

I'll admit I do not have more up to date information then that, so maybe DMH isn't quite raking in dough hand over fist anymore. Before I go any farther I would also like to look at the profit over total revenue, a.k.a. profit margin.

  • 1999 - $135,207,370 total revenue with a profit of $19,330,490 or 14.29% of revenue was profit.
  • 2000 - $142,421,357 total revenue with a profit of $14,288,225 or 10% of revenue was profit.
  • 2001 - $156,907,733 total revenue with a profit of $9,233,667 or 5.8% of revenue was profit.
  • 2002 - $182,992,200 total revenue with a profit of $5,703,584 or 3.1% of revenue was profit.
The real question at this point becomes how much profit should a non-profit company be making?

In 2004, in Urbana, Provena Convent Medical Center had it's non-profit status revoked. Provena, which has 270 beds then had to pay over $1 million dollars in property taxes. In an article from the Wall Street Journal on February 14, 2004 Lucette Langado wrote
The decision by the Illinois Department of Revenue in Springfield came after the Champaign County Board of Review, a three-member panel that reviews property-tax assessments, questioned the tax-exempt status of both major hospitals in Champaign-Urbana over the past two years. The Champaign board documented that hte hospitals filed lawsuits and used other aggressive debt-collection tactics against patients who didn't pay their bills. "Based upon the fact that they sue --people and we had been told by the Department of Revnue if you sue people you are not charitable -- there was not a lot of room for ambiguity," said Stan Jenkins, a longtime member of the Champaign board.

In its challenge to Provena Covenant's tax-free status, the Champaign board also argued that Provena had allowed a host of external for-profit entities to fulfill key hospital functinos. The use of outside, for-profit companies has become fairly common across the not-for-profit hospital industry.
According to the Macon County Circuit Clerk's webpage Decatur Memorial Hospital is listed as a litigant in 5276 cases, stretching back to 1986, the vast majority of which are small claims cases.

In 2003, the last full tax year before this decision was handed down, Covena actually showed a loss of $700,000. The year before that DMH showed a profit of $5,703,584.

For months we have read in the Herald & Review city leaders praising the landing of Target pointing out how far the $800,000 in sales taxes it will hopefully yield a year will go to help the city. The only question I have is how far would the property taxes from DMH go to help all of our taxing bodies if it's not-for-profit status was revoked?