Wishard's Fate in Taxpayers' Hands

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(posted 9.18.09)

Marion County Health and Hospital Corporation Director Matthew Gutwein is in need of voter support on the November 3 special election referendum to build a $754 million hospital.

Gutwein's September 15 presentation at City County Councilor Robert Lutz's Town Hall meeting was greeted by some challenging questions and funding skepticism from the audience. Gutwein insisted the proposed three building facility would be funded by revenues the corporation generates from services, rather than a tax increase.

Financing would come from $150 million in cash reserves, $120 million in Build America Bonds and $604 million from the proposed general obligation bond. Gutwein said $38 million will be needed for annual debt service payment on the 30 year bond.

Gutwein talked about the high ranking the hospital receives from the University Healthsystem Consortium, despite running its operations from buildings that date as far back as 1914. He talked about the number of firsts in innovation Wishard has had in its 150 year history. Among them - first to use electronic medical records, and the first two-way radio system in ambulances in the 1940s. Despite being known as the "poor people's hospital," Gutwein said quality of care is higher than state and national averages because of its ties with IU and Purdue Pharmacology.

Gutwein said the hospital is the busiest in the state, and possibly in the country, in emergency care. Inpatient stay is about flat because they are 98 percent occupied.

Wishard currently requires $25 million in annual maintenance for its 17 building campus. The maintenance funds would be shifted to help pay for debt service. Only 5.4 percent of this year's budget comes from property taxes, while the hospital's economic impact is $1.2 billion.

The new buildings will need 45 percent less energy, while treating 20% more people. The parking garage will be shared with the VA hospital.

Phil Hinkle, representing himself as a taxpayer and not a state legislator, said he is worried about the timing of the project. He was concerned that the referendum's omission of the $754 million price tag would cause voters to agree to the project, giving the corporation a blank check. He noted the bond amount could change once voters approved it. Health and Hospital's request to remove the cost from the referendum was approved by the legislature during the special session. Indiana law requires a cost estimate and tax increases be included in the ballot listing.

(c) Except as provided in subsection (j), the following question shall be submitted to the eligible voters at the election conducted under this section:

"Shall ________ (insert the name of the political subdivision) issue bonds or enter into a lease to finance ___________ (insert a brief description of the controlled project), which is estimated to cost not more than _______ (insert the total cost of the project) and is estimated to increase the property tax rate for debt service by ___________ (insert increase in tax rate as determined by the department of local government finance)?".

Hinkle mentioned the proposed $32 billion in cuts to long-term care that could bring a drop in revenue to the corporation. Health and Hospital owned over two dozen nursing homes in the state at the end of 2007. Revenue from long term care brought in $233 million, or 26% of patient revenue in 2007.

Hinkle thinks the plan would create an exodus in Marion County if the projected costs increase, because people are tired of paying higher taxes. He also said there is a contradiction in Health and Hospital's 2008 Annual Report about relying on revenues from Medicaid. “The Corporation does not have access to reasonable information to estimate levels of combined DSH (Disproportionate Share Hospital Share program) and UPL (Upper Payment Limit) payments and therefore cannot reasonably estimate levels of revenue by state fiscal (or their own) fiscal year.” The report further states ”Medicaid Special Revenue associated with LT Care is based upon UPL payments, which is more predictable than the payments related to Wishard's services.”

Gutwein attributed those statements to "auditor's speak", noting they receive payments "that often are years after the fact", due to delays in the system. He disagreed with Hinkle's concern on the loss of revenue for long-term care, saying federal funding in the long-term care area will be based on quality and occupancy rates.

Gutwein was confident the financing would remain intact, even if inflation returns or revenues drop, because of the corporation's ability to cut significant amounts of variable costs to match the revenue drop. He disagreed that the $754 million figure would increase after the referendum. He stated the number is set in stone, and has never been held in "secrecy." Three cost estimators were hired and all agreed that $754 million was a solid number.

The next public meeting on the referendum is in the Ben Davis High School Auditorium, 6:30 pm on September 23.