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Public Policies to Increase Hospital Competition, Improve Quality of Inpatient Care and Lower Health Care Costs

Public Policies to Increase Hospital Competition, Improve Quality of Inpatient Care and Lower Health Care Costs

The hospital industry in Illinois is important in terms of both its economic impact and its role in maintaining population health. According to the Illinois Hospital Association, hospitals in Illinois contributed directly $32.8 billion, and indirectly $78.7 billion to the Illinois economy in 2010-2011.1 In terms of health care, the Kaiser State Health Facts database reported that hospitals in Illinois provided 1.6 million days of inpatient care (0.6 per person in Illinois) and 6.8 million outpatient visits (2.5 per person in Illinois) in 2010.2 As the magnitude of these numbers indicates, hospitals are vitally important to both the economy and population health of Illinois. Most hospitals in Illinois are not-for-profit (NFP). Of the 191 community hospitals in Illinois that provide general medical and surgical care (e.g., not psychiatric care), 150 are NFP institutions, 25 are operated by state (i.e., University of Illinois Hospital) or local (e.g., Stroger Hospital in Cook County) governments, and 16 are for-profit organizations. Illinois has relatively fewer for-profit and government-operated hospitals than other states. A distinguishing feature of NFP hospitals is that they receive subsidies from the federal and state government; state subsidies include exemptions from property and sales taxes and subsidies related to issuance of debt in the bond market.3 In this chapter, we assess the need for and consequences of these state subsidies.

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“Not-for-profit hospitals receive public subsidies from the state, most notably through tax exemptions and subsidiesin the bond market.”

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