Sunday, July 12, 2009

Health & Hospital Corporation Says We Have No Choice But To Build New Hospital

The public relations campaign has begun in earnest to convince Marion County voters they must borrow and spend at least three quarters of a billion dollars to build a brand new hospital to replace Wishard Hospital. I've previously told you the cost would reach $900 million, a cost I plan to stick by given the huge cost overruns that typically occur with these projects. The HHC's $400,000 a year CEO says:

"Really, what we're looking at is we either build new or we close down," said Matt Gutwein, chief executive officer of the Health and Hospital Corporation of Marion County, which operates Wishard Memorial Hospital. "For the future, renovation is not an option for us to be able to meet the needs of the community."

So Wishard plans to ask Marion County voters Nov. 3 for the right to borrow $604 million to $703 million -- calculating best- and worse-case scenarios -- over 30 years to finance a new hospital complex. Gutwein said the most likely debt level is $613 million, according to calculations.

The 1.2 million-square-foot facility on the west side of the campus of Indiana University-Purdue University Indianapolis would include an 11-floor hospital with about 300 inpatient beds, as well as outpatient facilities and administrative offices.

Gutwein said the more efficient new hospital would allow Wishard to treat roughly 20 percent more patients annually with about the same number of inpatient beds.

It is not uncommon for our major systems to fail. We have water leaks. Or steam pipes burst," Gutwein said. "Unfortunately, it's become routine."

"Inevitably, those major systems will completely fail. When that happens, we do not have the ability to replace those systems."

Health and Hospital Corp. plans to tap several sources of funding for the project.
It has set aside about $150 million in cash for a new hospital.

The Wishard Foundation wants to raise about $50 million over the next five years.
Health and Hospital Corp.'s surpluses also can be used to pay down debt. The company is projecting a surplus of about $55 million for 2009.

"We are completely committed to no tax increases," Gutwein said. "You should only seek a tax increase if that's your last alternative, and we have other alternatives."
Property taxes now supply about $24.9 million -- or about 5.4 percent -- of Wishard's $486 million in revenue.

If the referendum is approved by Marion County voters, the new Wishard complex could be completed by late 2013, according to Gutwein.
Let me begin by saying the first order of business should be to cancel this November special election and push it back six months to the 2010 primary election. This will save Marion County taxpayers more than a $1 million. The legislature, in typical form, mandated this special election and left it to our City-County Council to appropriate the funds to pay for it. It matters not whether HHC or the county general fund pays for it, it's all taxpayer money. This will allow for a long, thought out public process that HHC officials are trying to deny Marion County voters.

Secondly, it's disappointing in reading Dan Lee's story in the Star today that Mayor Greg Ballard has automatically agreed to go along with the advice he has been given by Bob Grand and Joe Loftus to support the construction of a new hospital. The two represent the HHC, and their law firm stands to make plenty of money in legal fees associated with the new project , but Mayor Ballard has ceded control of the City to the two and does whatever they order him to do. We aren't going to make the same disastrous mistake Ballard made with the CIB bailout. We must demand a long, thorough public debate before any decisions are made whether he likes it or not.

Finally, who decided the only choice is to build a new hospital if the current Wishard Hospital has outlived its usefulness? Marion County has no shortage of hospitals in this county. A hospital building expansion boom has been under way in the region for years. Further, we have a perfectly good hospital sitting vacant on the City's southside. [Update: Make that two vacant hospitals. In addition to St. Francis' vacant hospital on the southside, there is the vacant 317-room Winona Hospital in the 3700 block of North Meridian.] Most of Marion County's indigent population no longer lives near the center of the City; they are dispersed throughout the county. Instead of building one hospital in the center of the City to handle the indigent population, why don't we utilize existing hospitals in the county to treat indigent patients and use existing property tax revenues to compensate them for serving this population. These hospitals are also reimbursed additional "disproportionate share payments" through the federal Medicaid program. It is high time Marion County stopped segregating indigent patients from other publicly-subsidized hospitals that don't want to be bothered with these patients.

Mayor Ballard's statement in the Star story that Wishard Hospital has a "positive economic impact" that "reaches nearly every Indianapolis resident" is absurd. If he wants the hospital to have a positive economic impact, he will look for a way of doing this the most efficient, economical way, while still delivering the same quality of care services our citizens expect to receive from publicly-subsidized hospitals. The City-County Council needs to step up to the plate and provide some leadership on this issue that Mayor Ballard is quite clearly incapable of providing. The idea that this project can be undertaken and funded with existing revenues sources as the proponents suggest is preposterous. Taxes will have to eventually be raised to pay off those bonds and these people know it. They are, true to form, telling outright lies to the public to win approval and putting off the tough decisions to another day.

City-County Councilors should study what happened with the Cook County Hospital in Chicago. A more than $700-million hospital was built and soon faced budget shortfalls approaching a half-billion dollars. Several articles about that hospital's woes can be found here. Note also that Wishard had been running deficits annually as recently as 2005. Today's Star report indicates the HHC has stashed away $150 million for the new hospital! If the HHC has those kinds of cash reserves, why have we been levying new property taxes annually on Marion Co. taxpayers?


guido said...

Heres a thought, if the other hospitals dont want to assume any of the indigent care. Let them lose the property tax exempt status. Look into the revenues of the ambulance service. Big loser!

Russell said...

I am not sure how being known for "big massive hospital campuses" is a bad thing for Indianapolis. I like living here and knowing that I have the best medical care at my disposal.

Unigov said...

First, unless a new Wishard is built, the people that want the land where Wishard currently sits can't get their hands on it.

Second, nobody can skim any money unless something new is built. In the last 10 years we've replaced our library, airport, Pacers Arena, and Colts stadium, for no reason in particular other than the insiders wanted to skim off millions.

Third, the county could buy the perfectly good St Francis/Beech Grove for $25 million.

artfuggins said...

Of course, the other hospitals want a new Wishard. They dont want the indigent patients at their fancy hospitals. I have a choice and will use it. I will vote NO on this issue. I still dont understand if no tax money is going to be used, why do we need a referendum?

Paul K. Ogden said...

This is going to be a highly poltically popular move made much, much worse by doing it as a special election. This goes to show what I've been saying all along. Bob Grand and Joe Loftus care nothing about the Marion County GOP or the poliltical future of the Mayor. They're trying to profit as much as they can and have their friends and clients profit during these next few years knowing Republicans have no chance of winning in 2011.

Paul K. Ogden said...

Sorry, I mean "highly politically UNpopular move..."

Gary R. Welsh said...

You're really going to vote NO, Art? I heard they were planning to name the new hospital the Julia Carson Memorial Hospital.

artfuggins said...

Keep that up, AI, and I will vote yes. You know that I greatly admire and remember Julia Carson. Let her rest in peace.

Concerned Taxpayer said...

You may have a choice now, fuggins, but just wait until YOUR (p)resident and congress get their way with health care.
Then you will go where THEY tell you to go. And when. And how often. And what treatment you may get. (If any.)

artfuggins said...

My current employer paid insurance already tells me which hospital I must use, makes me select my primary care physician from their list and he can only refer me to certain specialists when needed. So what will be new????????

POPA said...

If that is true about naming the hospital the Julia Carson Memorial Hospital, I'm pretty disgusted. Win the argument on its own merits, HHC, or lose it, but don't try to ride on the coattails or the Congresswoman's memory.

jabberdoodle said...

artfuggins -- the law says that if a building project exceeds $12M in cost to be paid with bonds, then there must be a public referendum. It does not make any requirement regarding the money used to pay off the bonds. I don't know why there was specific legislation inserted late in the special session for H&H - since there is no ban on referenda in non-election years. But, it is clear that the H&H board does not have to vote for a referendum election this year and could wait until 2010 to save the taxpayers the cost of the election - over $1M. Or they could use their savings account to pay for it.

I too must wonder why they have so much money in their savings account when they do request and spend property tax dollars every year.

The Winona reuse is an idea well worth exploring. I await details on how H&H can pay off the bonds without spending tax dollars and why they cannot reuse a facility that sits empty.

artfuggins said...

Thanks...jabberdoodle!! It still seems such a waste of money to conduct the referendum on a non election day but your explanation seems to explain why it is even being held. I initially thought I would vote no but everyone I talk to seems to be in favor of it. I will have to listen to some more debate and see why it appears so popular.

jabberdoodle said...

I learned last night that H&H will be paying for the special election. Hopes are to limit the number of poll workers to 3 - inspector, one clerk and one judge - since this is a non-partisan election (usually there are 5 poll workers).

In addition, the 'rush' seems to be related to stimulus dollars. H&H was cited as indicating a loss of $50M in federal funding if they wait until next Spring for the referendum.

Gary R. Welsh said...

Jabber, The only federal stimulus dollars mentioned are access to government bonds at a reduced interest rate. This project was being developed 3 years ago without any thought of federal stimulus dollars. That's a bullshit argument that is being thrown out there now to justify building a new hospital now. Adding in interest costs, this project is still going to top $1 billion dollars. And it really doesn't matter who pays for the referendum, it is all coming out of tax-supported funds.

jabberdoodle said...

AI - I was just passing on the information. I know I have had those two questions front and center in my reaction to the news.

You make a good point about the money - although Wishard takes in revenue from services, I am not sure the percentage.

As for favoring or disfavoring the referendum question, I personally will have to see proof of repayment of the bond without raising taxes. Not them just saying so. I am tired of taxing units making all manner of inacurrate statements prior to a building project commencing. Inaccuracies that always seem to understate the tax hikes involved - a nonrandom outcome it seems to me.