Wednesday, July 22, 2009

Health & Hospital Corporation Makes $43 Million A Year From Nursing Home Chain

It's supposed to be the Health & Hospital Corporation of Marion County, but it has acquired more than two dozen nursing homes up and down the State of Indiana, which throw off $43 million a year to the local agency charged with providing indigent care in Indianapolis, money the taxpayer-supported nonprofit plans to put towards the construction of a new $750 million hospital. The IBJ uploaded a story to its website earlier today from its most recent addition after I reported earlier this week on the nursing home chain empire the HHC is building with taxpayers' money. J.K. Wall writes:

To pay for a shiny new downtown hospital, the parent corporation of Wishard Health Services will commit itself to yearly debt payments 10 times as high as they are now.

But Wishard officials have no doubt they can bear the extra load because of places like Rosewalk Village, a nursing home that sits on the eastern side of Indianapolis . . .

Health & Hospital’s nursing homes last year threw off $43 million in cash.

Now the organization can apply that money to the new $754 million hospital, which will re- quire annual debt payments of $38 million to $42 million.

“We have bought some of the worst nursing homes in the state of Indiana and turned them around,” said Health & Hospital CEO Matt Gutwein, noting that his own grandmother lives in one of the group’s nursing homes.

Health & Hospital announced July 12 that it would borrow up to $703 million to build a new Wishard hospital on the IUPUI campus, replacing its aging complex of 17 buildings at 10th Street and University Boulevard.

Gutwein is taking great pains to demonstrate Health & Hospital’s financial strength because he needs voter approval to borrow the money to build the hospital.

And he’s promising that Health & Hospital, which is partly supported by Marion County property tax revenue, will have no need for a tax increase.
Wall's story makes Gutwein out to be a financial wizard for supposedly turning around the deficits at Wishard because of his wise investments in a nursing home chain empire. He completely ignores the hundreds of millions the federal and state governments have contributed to Wishard Hospital over the past several years in Medicaid disproportionate share payments to help offset uninsured cases not otherwise covered by Medicare/Medicaid or private insurance, not to mention the tens of millions dollars in property taxes sent to him annually. Efforts at the State House to share some of those payments with Community East Hospital, which is experiencing an increasing number of indigent patients, were thwarted by lobbyists for HHC and Clarian, which also grabbed hundreds of millions of dollars of these payments for Methodist Hospital in recent years.

At a recent council hearing, Gutwein raised questions about Community East's financial viability, omitting the fact that Wishard and Methodist hog all of the disproportionate share payments to Marion County. Hall's story references "enhanced payments" HHC receives, without describing their purpose. One source complained to me that Clarian relied on those indigent care funds, in part, to help pay for the costly monorail it constructed to connect Methodist Hospital with the IU/Wishard medical campus at IUPUI.

Wall discusses the HHC's Rosewalk Village as a shining example of how the HHC is committed to "quality above net profits." Nowhere in his story does he mention the recent closing of Lockefield Villages, a nursing home adjacent to Wishard which the HHC only built in the mid-1990s. That facility only had a one star rating out of a possible five star rating from Medicare at the time of its closing.

Wall also boasts of the fact that HHC is earning profits of 17% of revenue before depreciation, amortization and interest are taken into account. Missing from that boast is the fact that HHC is removing hundreds of millions of dollars in assessed value from the property tax rolls at a loss to local units of government across Indiana and is not paying any income or sales taxes. I think I could make healthy profits on just about any business if I didn't have to worry about paying taxes to the government. Matt Gutwein is no business genius. He's just very effective at using our tax dollars as leverage to bilk more money out of the government. The question that should be asked is why we are allowing him and the HHC to diverge away from their mission of providing indigent care to Marion County residents and towards the building of a statewide health care empire?


Unknown said...

I really can't figure out why this nursing home thing is a problem. This is all about HHC trying to be self-sufficient instead of relying on property taxes. You acknowledge that HHC under Gutwein's leadership is taking steps to fund itself through sources other than property taxes. If they didn't do these things, and instead increased taxes, you'd be complaining even louder about that. You ask why HHC is owning nursing homes around the state rather than focusing on indigent care locally, when it is clear that the revenue from these nursing homes goes to support that mission.

HHC has spent years finding ways to build a much-needed new facility without a tax increase, which I would honestly have expected you to fully support. But no, doing that is just as unacceptable as a tax increase. I would love to know what you would have HHC do if you could step in and run it. Raise money for a new Wishard facility through taxes? Or just watch the dilapidated facility collapse around you and do nothing? You have plenty of opinions on what this organization should not be doing, but I don't see any suggestions on what they should do.

Gary R. Welsh said...

It's a problem because the HHC has no business out there building a tax-subdidized empire that is competing unfairly against private business. The private sector is perfectly capaable of providing these services. HHC is using the massive public subsidies it gets to leverage the acquisition of these facilities that it is in turn removing from the tax rolls. Nursing homes should not be part of their mission. Indigent care, yes. Long-term care for the eldery, no.

Unigov said...

Great reporting on HHC, what an empire. The only reason for them to build a new facility is cause IUPUI wants their land, on which to build yet more stuff.

btw the Clarian People Mover has one purpose - telecom.

The reason for its existence is to give Clarian a relatively cheap and easy way to run communications fiber. I got this straight from Clarian's telecom exec.

Gary R. Welsh said...

Remember all the problems they had with the people mover when it first began operation? Well, the story is that someone got the idea for it off the Internet, chose it and failed to notice that the specs for it recommended its operation in warm weather locales only like Disney World. Whoops.

artfuggins said...

While I am still inclined to vote NO against this referendum, I have been impressed for several years about Gutwein;s business acumen. He has done wonders with Wishard........I have no problem with the nursing home ownership. If you have ever tried to find a nursing home, you would know that good ones, clean ones, ones without constant urine smells are hard to find. Obviously the private sector is not up to the challenge so let HHC do It.

Septly said...

I think artfuggins said it best when he said that anyone who has actually had to look for a quality nursing home for a loved one has a hard time finding one they would feel comfortable entrusting the care of their loved one to, and if the HHC can do it better, then LET THEM! The private industry has had ample opportunity to provide quality nursing home care; unfortunately, most private nursing homes are miserable places. The HHC has proven through its nursing home ownership that it can turn around formerly mismanaged and substandard nursing homes. Moreover, if you had carefully read the news articles about the HHC's nursing home business, you would have learned that the HHC DOES partner with a private management company, so there is still some involvement from the private sector. The truth is that if the HHC were coming to the taxpayers asking for higher property taxes or any other taxes, then you would be pitching an absolute fit. Here you have the HHC going out and following the law which DOES allow it to operate outside of Marion County and to engage in any reasonable activity which supports its mission (and owning an investment activity DOES fall within this broad grant of authority) to support itself and limit its reliance on the taxpayers. One would think that Advance Indiana would be one of the BIGGEST supporters of the HHC's actions, but instead you condemn the HHC for its creative and perfectly legitimate approach to reducing its reliance on the taxpayers. Apparently, in your mind dogmatic adherence to political ideology is more important than finding practical real world solutions. Alright, you don't want the HHC to operate a successful nursing home business, (which apparently has the added benefit of providing many elderly people with a cleaner, safer, and happier place to live), then you must agree to paying substantially higher taxes to fund the mission of the HHC and build a much needed new hospital. I cannot agree with your position, though.

Gary R. Welsh said...

There is absolutely no proof that HHC runs its nursing homes in a more professional manner than private operators. How does the public benefit from these nursing homes? It doesn't. You refuse to account for the lost revenues and the fact that Marion County residents still pay property taxes to support the HHC when clearly it is making enough money to eliminate the property tax levy altogether. It banks the money instead so it can build a brand new, shiny hospital, which will cost taxpayers more than a $1 billion when all is said and done. Meanwhile, other hospitals are being closed and their buildings sit vacant, while other hospitals have built brand new buildings within the last 5 years.

Paul K. Ogden said...

Septly, it's the MARION COUNTY Health and Hospital Corporation. Do you really think the legislature intended the HHC-MC to own nursing homes all over the state of Indiana as part of its mission? Taxpayers are on the hook if those investments go bad. There is a considerable question over whether the ownership is even legal.

Septly said...

Again, I see no problem with the HHC owning and operating nursing homes. The state law authorizing the HHC specifically allows it to operate outside of Marion County--why would the law allow this if the General Assembly were to have been supposedly so concerned with the HHC focusing all activity only within Marion County? Also, EVERY municipal entity in the United States has some investments; there is ALWAYS a chance ANY investment can go bad (for either private or government entities); therefore, why is there not a law in ANY jurisdiction prohibiting government entities from making investments? Answer: Because taxpayers expect that government entities will make reasonable investments in order to subsidize the cost of the public services they provide. It makes sense for an entity which provides healthcare services to invest in healthcare providers. The nursing homes are well-managed and profitable investments; I see zero problem with the HHC owning them. I understand that certain posters on this site adhere to a political philosophy that asserts that the private sector should be providing all services and goods and that government is a "necessary evil" only for providing police protection and national defense. However, I think such people are allowing their political dogma to drive absurd accusations and push a silly conspiracy theory in the case of the HHC. And yes, there IS proof that the nursing homes HHC owns are operated better than at least some privately owned nursing homes because the HHC nursing homes were ALL privately owned and operated before the HHC purchased them and they were miserable places when held in private hands. At the end of the day, you can be as incensed as you like about the HHC's investments--they still exist (thankfully). They were NOT purchased in secret. The HHC has competent corporate counsel which I'm sure vetted the legality of such investments. However, if you think a violation of the law is occurring, then file a lawsuit--you will lose and only waste your money AND the taxpayers' money in the process, but maybe it will make you feel better and allow you to move on to other issues to wring your hands over. A new Wishard will be built, and the people who depend on Wishard for medical care will be the better for it. Again, the more obstacles you try to throw in the way, the more determined it makes people like me who really care about the indigent and working poor having adequate healthcare to do whatever it takes to see a new and better Wishard get built.

Clayton Moore said...

Well, Septly, aren't we getting testy? I wonder where you work. Comrade Obama might say that it is okay for government to own a private business but it goes against everything America stands for. What next, the library buys bookstores, the fire department sells fire safety equipment, the police sells alarms and on and on. It is un-American and that is that. So, to you Comrades, who follow Comrade Obama, welcome to Russia.

In America, Government’s job is to govern, to provide a level playing field and to protect all its citizens. Their job is not to drive them out of business. Anyone who can look at government and say they do anything and I mean anything better than private enterprise is living in a fantasy land and needs a refresher course on Americas history. I have seen more things screwed up by government that have been done even partially correct. Look at CIB and the Library which are both Municipal Corporations. These people are not elected and have made a mess out of this county. Metro, another Municipal Corporation has received several excess property tax levies over the past 4 years. And if you really want a dose of reality take a look at our wonderful government operated schools. Now there is a disaster, and those idiots are elected.

What happens when one of these government agencies buys a business that directly affects your business; is it okay then? Well, if they do, don’t come screaming to the law or the general assembly and start crying that they are being unfair to private business. If you don’t think it hurts just watch what happens to Ford. And if any of you work in the health industry, you will soon find out how bad all of this is when Comrade Obama’s Healthcare fiasco goes through. Besides, it’s not a political philosophy it’s our way of life, at least until Obama ame along.