Fitch warns Illinois hospitals on ratings
Issue of tax-exempt status raises red flags
By Peter Frost
Tribune reporter
11:23 AM CDT, April 16, 2012
With at least two dozen Illinois nonprofit hospitals facing the specter of paying millions in property taxes, Fitch Ratings on Monday warned that some of those institutions could face a ratings downgrade.
In a special report, the ratings agency said the potential denial of property-tax exemptions "is a negative credit development that could further strain financial performance" and "could negatively affect the ratings for Illinois not-for-profit hospitals."
With nearly a third of the state's hospitals in the red and expected cuts to Medicaid and Medicare reimbursements on the horizon, the additional cost of property taxes could result in a ratings downgrade, which would make it more difficult for some hospitals to take on debt and more expensive for them to borrow.
Fitch warned that hospitals whose debt has lower ratings, like Silver Cross Health System, Swedish Covenant Hospital and Resurrection Health Care, could have more trouble absorbing additional expenses if forced to start paying property taxes.
The report also noted that Northwestern Memorial's Prentice Women's Hospital, which along with two other hospitals had its property-tax exemption denied by the state last year, could be on the hook for $66 million in property taxes between 2008 and 2011, amounting to up to 1.5 percent of total annual revenue.
Gov. Pat Quinn in March ordered the state revenue department to resume reviews of property-tax exemptions sought by hospitals, though no new rulings had been issued as of last week.
His administration, along with other stakeholders, including the Illinois Hospital Association and the state Attorney General's office continue to meet, hoping to come up with new legislation that would more clearly define how the state measures charity care.
pfrost@tribune.com
Twitter: @peterfrost
http://www.chicagotribune.com/business/breaking/chi-fitch-warns-illinois-hospitals-on-ratings-20120416,0,303233.story
Monday, April 16, 2012
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