Wednesday, September 09, 2009

Someone In The News Media Is Catching On To The HHC

Hats off to Star business reporter Dan Lee. He becomes the first member of the mainstream media to ask tough questions of Marion Co. Health & Hospital Corporation CEO Matt Gutwein on the proposed $754 million new hospital to replace the current Wishard Hospital. Lee questions Gutwein in a video-taped interview on why the HHC has not made its audited financial statements available to the public, a question I previously raised on this blog. Gutwein insisted the HHC had been entirely transparent but Lee pressed him on making the documents available online. I'm not sure that Lee got a commitment from him, but I gathered from Lee's comments that the Star had been gathering lots of documents from the HHC through public records requests that have not been previously disclosed to the public.

Lee asked Gutwein to address skeptics who find it difficult to believe that the HHC can borrow nearly three-quarters of a billion dollars to pay for the new hospital without a need to raise taxes. Lee noted how other recent public projects, such as Lucas Oil Stadium and the Central Library, came in way above the original projected construction costs. Gutwein stuck to his meme about how HHC is unique from other municipal corporations like the CIB because it "generates revenues from our lines of business, not taxpayers' money." Gutwein insisted that the $38 million that will be required annually to cover debt service on the construction bonds represents a "modest portion of our overall budget" and is quite manageable given the success HHC has experienced from its other "lines of businesses."

Although Gutwein insists these other "lines of businesses" don't involve taxpayers' money, that is simply not the case. HHC says its chain of nursing homes are generating over $40 million a year in profits for the HHC, which has allowed the nonprofit to bank more than a $100 million in a relatively short period of time to pay towards construction of the new hospital. Lee hit Gutwein with the question of the HHC's heavy reliance on this "side business" and whether that shouldn't raise serious concerns in the public's mind. Gutwein insisted that long-term care is an excellent business with which to be involved. He insisted that the nursing homes it acquired "improved care" for the residents of those facilities; HHC had invested much-needed capital in them to improve them; HHC had improved the management structure of them; HHC paid property taxes on the facilities so there was no harm to local governments in their acquisition; and the diversification of revenue sources for HHC had made it less dependent on property taxes. Gutwein insisted that there are no proposals in Washington that would alter funding for long-term care in any way that would negatively impact those revenues.

Gutwein's assertion that HHC pays property taxes on its nursing homes is a question I've been pondering recently. If HHC is a nonprofit, government-owned organization, why would it pay property taxes on its nursing homes? Well, I guess that depends on what HHC owns. We know that American Senior Communities (ASC) actually operates these nursing homes for HHC. A recent exchange with City-County Councilor Edward Coleman (L) on Paul Ogden's blog really got me to thinking about this further. Ogden blogged about the need for "healthy skepticism" over the planned new hospital. He began asking questions, like me, as to how the HHC got into the nursing home businesses. Ogden listed all of the nursing homes on his site, which elicited the following exchange with Coleman:

Coleman:

Everyone of the facilities on your list are owned by American Senior Communities. I know because I work for American Senior Communities. Last word I had is that the only one HHC owns is Lockfield Village right across from the current hospital.

Call me and I will verify it for you.

Paul:

Ed, thanks for the info. That's just the ones I took from the SOS website. I don't know if it's the same list that Gary had. His came from a different source.

Gary:

Ed, I'm not trying to embarrass you, but your information doesn't jive with the IBJ's recent report by J.K. Wall. As he explained, ASC manages the facilities owned by HHC:

"Health & Hospital launched its nursing home gambit in January 2003 when it spent $9.7 million to buy 12 nursing homes-including Rosewalk Village-from a company affiliated with Indianapolis-based American Senior Communities LLC.

The home management company had been trying to turn around the facilities for a couple of years, but lacked the capital to do it. So Health & Hospital promised to invest $1.7 million a year to improve the homes and hired American Senior to keep managing them."

Paul:

It sounds like American Senior is the manager and not the owner then.

It looks like to me the purchases would have had to date back to early 2002, not 2003. They were filing assumed name certificates in early 2002.

Gary:

The State's website for licensed nursing homes in Indiana makes clear HHC is the owner of the facilities.
After that exchange, I wondered to myself how Councilor Coleman could not have known that the nursing home at which he was employed was owned by HHC. That is critical information for him to know because matters pertaining to the HHC come before the City-Council from time to time and he needs to be apprised of any possible conflict of interest. Perhaps HHC doesn't actually own the facilities; rather, it owns the licenses upon which ASC relies to operate the nursing homes. That would explain why HHC is not paying property taxes on these nursing homes. ASC, after all, is a for-profit, privately-owned company. About that time, a reader of this blog told me to take a look at the issue of upper income limit payments and how HHC might possibly be using them to extract additional funds from Medicaid. I won't go into that issue in detail in this blog, but suffice it to say, it is a scam state Medicaid agencies and county-run nursing homes have created to leverage more Medicaid dollars from the federal government than they would otherwise be entitled to receive.

Is HHC's ownership of the licenses for these facilities that are in fact being run by a private company being used as a ruse to obtain much higher Medicaid reimbursement rates for these so-called HHC-owned nursing homes than other privately-owned nursing homes are allowed to be reimbursed, thereby giving them a huge competitive advantage over other nursing home operators? I was encouraged that Lee mentioned upper income limit payments in his interview with Gutwein as a reason for concern about the long-term viability of the HHC's current revenue model. Gutwein completely dodged answering the question and I think I know why. I'm hopeful Lee will delve deeply into this issue and expose it for the scam on the federal government that it represents. I will continue to do my part to find out as much about this aspect of HHC's "miracle business success story" as possible.

See Lee's video-taped interview with Gutwein here.

5 comments:

Downtown Indy said...

Ed's place of employment is probably awash in signage, paychecks, paperwork and other things proclaiming 'This is an American Senior Community' so I would think it easy to have the wrong conclusion.

Not that I dispute he SHOULD be better informed, being a councillor.

Paul K. Ogden said...

Wow, it sounds like Dan Lee really knew his stuff going into the interview. I was impressed by his questioning.

I think we really have to sort out exactly what HHC owns relative to those nursing homes. I too don't understand why they would, apparently voluntarily, be paying property tax for those nursing homes. I would note that one of us speculated that they might have been taking the properties off the tax rolls. Sounds like a response to that.

As far as HHC's ownership of American Senior Communities, the fact that Ed or anyone else that works at ASC, might not have known what HHC owns doesn't surprise me. Ownership issues in many businesses are very complicated, especially when you're talking holding type companies which is essentially what HHC is when it comes to owning those nursing homes. DI is exactly right in his observation that there probably isn't the name HHC on anything where Ed works. I think the fact that some part of Ed's employer might be owned by HHC essentially as a holding company probably is too tenuous to be a conflict. Ed is a nurse where he works and not part of management.

Advance Indiana said...

Paul, The fundamental question here is whether this arrangement is a thinly-veiled attempt to make what is otherwise for-profit nursing homes appear to be nonprofit, county-owned nursing homes. The upper income limit payments are only supposed to be made to county-run facilities that are providing disproportionate care to indigents. The facilities wind up getting reimbursed well above their actual costs for providing these services. The state approves the higher reimbursement rates to these facilities as a way of getting more matching funds from the federal government for Medicaid. These facilities rob other Medicaid-dependent facilities of these additional monies. These nursing homes have nothing to do with providing indigent care; it's just a scam to allow HHC to get more than its fair share of Medicaid dollars. It's one thing to do this with Wishard, which actually provides disproportionate care, but it is quite another to take what is essentially a for-profit nursing home and make it appear to be a county-run facility in order to skim additional Medicaid dollars without providing any different care than what competing nursing homes provide. Gutwein boasts that HHC provides better care at these nursing homes. The only one providing the care is ASC; Wishard closed Lockefield Village only a decade after it was built and opened. It received the lowest possible rating by the government (1 out of 5) for quality of care.

jabberdoodle said...

I'd just like to make sure the legal language of the referendum bubbles into this exchange.

I don't see that the language will legally bind H&H to build any building, or restrict its bond amount to -oh, say- any amount, or not use tax moneys if any other revenues of H&H dries up. The bonds would be secured by their revenues -- no restrictions on only profits from nursing homes.

Anyway - wanted to inject this thought into the mix.

dcrutch said...

Thank you, Mr. Lee, for trying to be a journalist. It appears to be a dying art, little appreciated, probably paying little, nearly as arcane as trying to find someone to perform limestone carving on buildings downtown. It's refreshing to see- for as long as your permitted to practice it.