More Wishard Lies: Former HHC Director Calls Financing Scheme A Scam

UPDATED: It looks like the folks at the Health & Hospital Corporation are upping the ante on the November 3 special election referendum to authorize the HHC to borrow more than $700 million backed by a county-wide property tax levy. Absentee ballot applications are being mailed out by the proponents which warn that Wishard Hospital will be closed if the referendum is not approved. WRTV's Norm Cox interviewed me this afternoon to hear my explanation of why the HHC's claim that it is not going to have to raise property taxes a dime is simply not true. Cox aired his interview on the 6 at 7 broadcast this evening, which included a shocking statement from former HHC Director Mitch Roob, who called the financing scheme using nursing home revenues a "bit of a scam" on the federal government. Roob formerly served as Gov. Mitch Daniels Secretary of FSSA and currently serves as the CEO of the Indiana Economic Development Corporation. Cox's analysis agrees with mine that it is fiction for the HHC to claim the new hospital can be built without property tax increases. The proof is in the HHC's public notice advertised this past week in the Star in which it stated:

All or any portion of the Health and Hospital Corporation’s payments of principal of and interest on the General Obligation Bonds and/or rental payments under the Lease may be payable from ad valorem property taxes collected by the Health and Hospital Corporation on all taxable property within the geographical boundaries of Marion County, Indiana.

The public announcement makes clear that the Marion Co. Building Authority, on HHC's behalf, intends to issue bonds totalling as much as $703,040,000. The HHC will lease the new facilities to be constructed using those bond proceeds from the Building Authority at an annual cost of up to $54.8 million. Repayment of the bonds is secured by property taxes on Marion County property owners of an equal amount. Over the life of those bonds, the HHC expects to pay total interest costs of $830.5 million over and above the principal amount. Total lease payments paid by the HHC to the Building Authority are expected to be $1.478 billion. The HHC assures us that it will have sufficient revenues from its nursing home business to pay these expenses without levying new property taxes, but that will be true only under the most favorable of circumstances.

I've previously described how the HHC is essentially creating an illusion that it owns nursing homes that it actually leases from a private business and, in turn, leases to American Senior Communities to operate. Because HHC is a county hospital providing indigent care, it receives Medicaid reimbursements at nearly double the rate of other nursing homes. If the government puts a stop to this scheme or simply alters nursing home reimbursements, as it already has announced its intention to do, this revenue stream could shrink or dry up altogether. Roob's conclusion that this is a bit of a scam on the federal government further bolsters the view that somebody at the federal government is going to catch on. After all, he headed up the state agency that deals with Medicaid funding issues until last year. Further, disproportionate share payments to Wishard from the federal government are also expected to be diminished, if not eliminated altogether, if Congress adopts President Obama's health care plan to provide health insurance to all Americans. Wishard collects more than $100 million of that category of special Medicaid payments currently. There are any number of likely scenarios that will leave Marion Co. property taxes holding the bag to pay for the costly new hospital. What about those property tax caps you were promised. Forget it, this tax levy will fall outside the property tax caps. The proponents of the new hospital will share none of these facts with you, but that's the reality we will face if voters approve the referendum on November 3.

One point that I would take issue with in Cox's report is his acceptance as fact that Wishard Hospital will have to close if the new hospital construction is not approved. Gutwein says that the hospital may have to close within the next 5 to 6 years and certainly inside of the next 10 years if the referendum in not approved. He makes that claim at the same time he brags that the current hospital has achieved the highest possible accreditation rating, making it one of the highest rated hospitals in the nation. I would note that there have been tens of millions of dollars of improvements to the current hospital over the past several years, including a renovation of the hospital's operating rooms. People point out that renovations are taking place at the hospital as I write. I live in a hundred year-old-building. Nobody here is talking about tearing it down because it's too old. I think a closer look at the actual facilities at Wishard would suggest the hospital could easily stay in the current facility at least another ten years, if not longer.