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KEVIN LEININGER: The issues are still in dispute, but dialogue about non-profit hospitals is healthy

AP photo
Travis Holdman
Kevin Leininger

Otto von Bismarck famously observed that “Laws are like sausages; it is better not to see them being made.” But ignorance is seldom really bliss, so it’s good to see an evolving debate over non-profit Hoosier health care and a possible legislative response grind on in public.

As I first reported last month, Ball State University economics Professor Michael Hicks has authored a study suggesting Parkview Health and four other not-for-profit hospital systems operating in Indiana have amassed “super-normal” cash reserves of nearly $28 billion while the annual per-person cost of health care has gone from $330 less than the national average in 1998 to $819 more than average. I also noted Hicks’ report had caught the attention of State Sen. Travis Holdman, who planned a hearing to explore related medical and financial issues.

“We’re not trying to expose anybody,” said Holdman, R-19th. “I just want (those hospitals) to be players . . . they need step up to the plate.”

But the subsequent release of Hicks’ report and additional media attention generated a rebuttal from the targeted group and, coincidental or not, a promising shift of focus in Indianapolis.

“We need more dialogue, but unless we use the same data that makes dialogue difficult,” said Brian Tabor, president of the 170-member Indiana Hospital Association, who in a column written for Indiana newspapers questioned Hicks’ methodology and many of his conclusions.

For one thing, Tabor said, Hicks’ claim of $28 billion in total investments is misleading because it included nearly $18 billion held by Missouri-based Ascension Health, which operates St. Vincent Hospital in Indianapolis and is the country’s largest Catholic health-care network. Ascension, Tabor noted, operates in 21 states — a fact that would dramatically reduce its Indiana-related assets. Parvkiew’s investments exceed $1 billion.

Tabor also suggested Hicks inflated the hospitals’ reserves by relying on federal tax documents instead of audited financial statements, which would have reflected liabilities as well as assets. That, he insisted, would have especially affected Hicks’ claim that Parkview’s Wabash facility showed a 49 percent profit in 2015 when, in fact, it lost money.

Not-for-profit hospitals are shielded from some taxes but must strategically invest in “community benefit,” which Tabor said totals about $2.5 billion annually statewide. Parkview’s reported community benefits for 2018 include: health improvement services and community benefit operations, $5.39 million; health professions education, $5.2 million; subsidized health services, $1.64 million; research, $531,987 and cash and in-kind contributions to community groups, $4.67 million. That’s a total of about $17.45 million. Parkview also reported $441.5 million in uncompensated health care in 2018.

The numbers do not include the hospital’s financial support for Parkview Field, according to spokeswoman Jessica Foor.

“Indiana’s not-for-profit hospitals are absolutely committed to improving public health and investing in their communities,” he concluded. “The report also fails to acknowledge hospitals’ significant, positive economic impact.”

But Hicks never suggested otherwise, nor could Tabor debate the rising cost of health care or challenge the fact that Parkview and other not-for-profit hospitals appear to be doing quite well while some of their investor-owned competitors (notably Lutheran Health parent Community Health Systems) are not.

There are two distinct but related issues at play here: not-for-profit hospitals’ financial holdings and their impact on health care in Indiana. Whether the reality of their impact more closely mirrors Hicks’ or Tabor’s vision or lies somewhere in between, both men correctly identified the need for fact-based analysis.

Indiana legislators are therefore right to follow two tracks, as Holdman described for me this week. The Senate Health & Provider Services Committee under Sen. Ed Charbonneau, R-5th, will be looking at health-related issues, including insurance, billing and transparency. Holdman’s Tax and Fiscal Policy Committee will continue to scrutinize the hospitals’ assets, but with a slightly different focus.

“We’re trying to avoid further taxation,” Holdman said in a reference to one of Hicks’ proposed policy changes. Instead, one possible approach would be the establishment of a voluntary fund intended to promote projects in Indiana by giving hospitals, endowment funds and others an incentive to invest in Indiana instead of Wall Street. “We want to focus on economic development,” said Holdman, who said legislators will be seeking advice about how best to legally create such a program.

Tabor didn’t want to comment on such a “theoretical” possibility, and as I mentioned previously government should move cautiously in such matters, if at all. Much more information will be required before it would be appropriate even to consider legislation, because it isn’t wrong to be successful — or shouldn’t be, at least. But it seems Tabor will get the dialogue he wants, and that’s a good thing for anybody with a proper appreciation of sausage.

A refusal to at least talk, after all, could encourage a replay of what just happened in California, where the state attorney general is suing non-profit Sutter Health for allegedly using its dominance to stifle competition and boost consumer costs.

This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at kleininger@news-sentinel.com or call him at 461-8355.

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