RESOLVING THE LEDGER
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A new law in Illinois requires hospitals to file more financial information with state regulators, giving them a deeper look into whether medical centers are struggling.
But these records will be hidden from the public, the law states , limiting how much patients, their doctors and even community leaders like city councils know about hospitals in their back yards.
This is one piece of a broad law Gov. JB Pritzker signed in June “to support at-risk hospitals, strengthen our statewide care infrastructure, and defend the interests of patients and taxpayers,” he said in a news release at the time.
The law also creates a new loan program for distressed hospitals and requires hospitals in debt to the state to submit wind-down plans in case they close.
State lawmakers approved the new law unanimously, records show. It’s more than 500 pages. But after WBEZ raised questions about shielding hospital finances from the public, some now say they either don’t support that part of the law or suggest it could be changed.
“I don't support the fact that this is not available for the public to see,” said West Side state Rep. La Shawn Ford. “I think that the community deserves to know” whether a hospital is healthy or not.
A for-profit hospital on the edge of his district, West Suburban Medical Center in Oak Park, abruptly closed in March. Its owner closed the hospital and Weiss Memorial in Uptown last year, owing the state more than $100 million in advances, taxes and penalties. The state has recouped at least $13 million so far.
Located across the street from Austin, West Suburban was a destination for the majority Black neighborhood, which has one of the lowest life expectancies in Chicago.
Now a quick trip in an emergency has turned into a 10- to 20-minute drive to hospitals already stretched thin or have emergency departments so packed they’re on the cusp of turning away ambulances, a recent WBEZ/Sun-Times investigation found.
Doctors fear more hospitals could close next year when big cuts to Medicaid public health insurance for people who are poor or have disabilities take effect. More than 400,000 people could lose coverage , meaning less money for hospitals that treat them.
In the new law, hospitals licensed by the state must file audited financial statements, as well as balance sheets detailing their assets, liabilities and net worth. Audited statements are considered the gold standard for hospital financial reporting , said Zachary Levinson, who leads the Project on Hospital Costs at KFF, a non-partisan health policy organization.
These details offer a window into where a hospital’s money comes from, and how much they’re making versus losing. They show whether a hospital can invest in their facilities to improve the quality of care for patients, or if they need more resources to prevent closing or reducing services.
As Medicaid cuts looms, a hospital’s finances could offer an advanced warning — in particular for people who rely on their local hospital, Levinson said.
“I can understand why a health system might not want to disclose some information to the public,” Levinson said. “But I can’t really think of what the benefit to the public is of keeping this data under wraps.”
Under the new law, Illinois hospitals’ financial information would not be subject to the state’s open records laws or even a subpoena. The state could release aggregated information, or a summary, that would not name specific hospitals, the law states.
Pritzker, a billionaire businessman and an heir to the Hyatt hotel fortune, declined an interview. In a statement, he said: “Ultimately, hospitals are private entities, and the inclusion of a privacy clause in the new law reflects the understanding that detailed, private financial data must be handled in a sensitive manner."
In Illinois, hospitals already provide some financial information to the state that’s accessible to the public. For example, a hospital profile , of sorts, spells out how much revenue they make each year, number of patients they treat and services they provide.
The majority of hospitals in Illinois are nonprofits, according to KFF. Their finances are typically easier to find than a for-profit, from public tax returns filed with the government, to posting their financial statements on their web sites.
Publicly traded for-profit hospitals must disclose their finances in filings with the U.S. Securities and Exchange Commission. But many others don’t have to.
State Rep. Anna Moeller, a lead sponsor of the new law, said the new financial reporting requirements create more accountability for hospitals, which are largely funded by the government.
“There will be more transparency to the state,” said Moeller, an Elgin Democrat. “To the public? No. … But it's something that I think probably merits more discussion.”
She also leads a bipartisan group of lawmakers overseeing Medicaid issues whose meetings are held behind closed doors. Medicaid is a significant part of the state budget . Proposed laws debated during the group’s private discussions come up in public hearings, Moeller said.
Senate President Don Harmon called the new law “a first step.”
“If we need to fix the law, we know the guys that do that,” said Harmon, a Democrat in Oak Park, where West Suburban closed.
The Illinois Health and Hospital Association, a powerful lobbyist for hospitals across the state, declined an interview. In a statement, a spokesperson said the state wanted to bring together information that hospitals now report in pieces to analyze the overall condition of the industry.
The hospital association requested a “confidentiality provision” to protect hospital data that, when viewed in isolation, may not accurately reflect a hospital’s overall financial condition, could be misinterpreted or may contain proprietary business information, the spokesperson said.
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