Sunday, July 26, 2009

The Need for Healthy Skepticism Regarding Heath and Hospital Corporation Purchase of Nursing Homes

For the record, I don't have a knee jerk reaction against a new Wishard Hospital, or at least moving the services provided by Wishard to a newer facility. There does seem to be a need to do something. But the special election in an off year seems like a highly calculated political move to take advantage of extremely low turnout that will favor the pro-Wishard folks. The effort to rush things also sets off alarm bells. Perhaps, just perhaps, Health and Hospital Corporation of Marion County wants the issue decided before there is a chance to take a close look at its activities. I feel like we taxpayers are on a used car lot and the salesman, i.e., Matt Gutwein head of HHC-MC, is telling us we have to buy today or lose the deal. That's exactly the time to take some time to think of your options.

Unfortunately, I'm afraid the Indianapolis City-County Council will buy the used car without stepping back with a healthy dose of skepticism. Representatives of groups like HHC-MC will appear, show a glossy presentation and councilors will praise the presenters for their candor, and the meeting will be adjourned. Councilors need to be more skeptical, not accepting things at face value. My criticism certainly doesn't apply to everyone. There are a few councilors, mostly Republican, who will ask pointed questions.

The acquisition of nursing homes throughout the State of Indiana by HHC-MC does not pass the smell test. It seems more than a little odd, almost as if HHC-MC is using its special status as a municipal corporation to try to build a health care empire, with taxpayers of Marion County holding the bag should something go wrong. Here are some questions I think members of the council need to ask:

Could Marion County taxpayers not be on the hook for these nursing home acquisitions if the investments go sour? What liabilities do taxpayers have should these investments go sour? Or what if there is a wrongful death lawsuit at one of the facilities? Are taxpayers going to have to pay?

HHC-MC is a non-profit, municipal corporation. What is the impact of the tax code on HHC-MC, a non-profit entity, acquiring for profit businesses.
---This seems to be a way of trying to get around IRS rules and raises red flags. The IRS doesn't like it when you try to get around the tax code. HHC-MC may think there will not be tax consequences, and may have even been advised by a tax attorney the municipal corporation won't have any, only to find themselves subject to an IRS penalty down the road that we taxpayers get stuck with paying. Tax law interpretation is quite often not black and white. The problem is the IRS has almost complete authority to interpret the gray area.

Does HHC-MC have the right to purchase these nursing homes many of which are far outside of Marion County? Isn't the municipal corporation's mission providing health care to the indigent in Marion County? How does owning a nursing home in Valparaiso advance this mission?

What triggered the rush to purchase all these nursing homes in a four year period? How much did they cost? What money was used to purchase the nursing homes? How much money is still owed? Did HHC-MC mortgage the properties?
---Again, we taxpayers could be on the hook for all these investments. We need to know.

Is HHC-MC purchase of these nursing homes taking the properties off of local property tax rolls?
---If so, I could see a county going after HHC-MC for the payment property taxes.

Who is personally profiting from these non-profit corporations?
---The tax returns of non-profits are public and these include the salaries of top officers and employees. Likewise the salaries paid to municipal officers and employees would be subject to review. However, with numerous for-profit entities in HHC-MC's portfolio, it would be very easy to have some of the compensation channelled through the for-profits so those payouts to executives would not be subject to examination. On the 2007 tax return of a Wishard Foundation, Matt Gutwein, head of HHC-MC, was listed at $331,395 and Dr. Lisa Harris, CEO of Wishard Hospital, was shown as making $300,396. That's probably just part of Dr. Harris' compensation. Regarding HHC-MC, the council should ask whether Gutwein and others are getting pay channelled through the for profit nursing homes, pay that would not necessarily be scrutinized by anyone.

Here is the list of nursing homes listed on the Secretary of State's website as being owned by HHC-MC.

2/2/2005 BEECH GROVE MEADOWS (Assumed)
2/2/2005 SPRING MILL MEADOWS (Assumed)
2/2/2005 BEECH GROVE GARDEN HOMES (Assumed)
2/2/2005 HERITAGE PARK (Assumed)
2/2/2005 NORTH WOODS VILLAGE (Assumed)
2/2/2005 FOREST CREEK VILLAGE (Assumed)
2/2/2005 FRANKLIN MEADOWS (Assumed)
2/2/2005 ROSEWALK VILLAGE (Assumed)
2/2/2005 ROSEWALK VILLAGE AT LAFAYETTE (Assumed)
2/2/2005 EAGLE VALLEY MEADOWS (Assumed)
2/2/2005 RIVERWALK VILLAGE (Assumed)
2/2/2005 ZIONSVILLE MEADOWS (Assumed)
2/2/2005 MONTICELLO ASSISTED LIVING AND HEALTHCARE (Assumed)
2/2/2005 SPRING MILL GARDEN HOMES (Assumed)
2/2/2005 RIVERVIEW VILLAGE (Assumed)
2/2/2005 CARDINAL NURSING AND REHABILITATION CENTER (Assumed)
2/2/2005 BETHLEHEM WOODS NURSING AND REHABILITATION (Assumed)
2/2/2005 COMMUNITY NURSING AND REHABILITATION CENTER (Assumed)
2/2/2005 NORTH CAPITOL NURSING AND REHABILITATION CENTER (Assumed)
7/7/2005 AMERICAN VILLAGE (Assumed)
1/26/2007 MARKLE HEALTH AND REHBILITATION (Assumed)
1/26/2007 MAPLE PARK VILLAGE (Assumed)
1/26/2007 EDGEWATER WOODS (Assumed)
1/26/2007 RIVERSIDE VILLAGE (Assumed)
2/14/2007 EAST LAKE NURSING & REHABILITATION (Assumed)
2/14/2007 VALPARAISO CARE & REHABILITATION (Assumed)
3/11/2008 WESTVIEW NURSING & REHABILITATION CENTER (Assumed)
3/11/2008 COLUMBIA HEALTHCARE CENTER (Assumed)
1/23/2009 NORTH PARK NURSING AND REHABILITATION CENTER (Assumed)
1/23/2009 GLENBROOK REHABILITATION AND SKILLED NURSING CENTER (Assumed)
1/23/2009 CLARK NURSING AND REHABILITATION (Assumed)
2/6/2009 BROWNSBURG MEADOWS (Assumed)
2/6/2009 COVENTRY MEADOWS (Assumed)
2/6/2009 MEADOW LAKES (Assumed)
2/18/2009 COVENTRY MEADOWS ASSISTED LIVING (Assumed)
2/18/2009 ARBOR GROVE VILLAGE (Assumed)
3/25/2009 WASHINGTON HEALTHCARE CENTER (Assumed)

13 comments:

Jon said...

Isn't there code that speaks to the owners of nursing homes being within a four mile radius? If that statute exists how does HHC own homes in Lafayette? At what point in the tax code can a non profit own for profit businesses?

Paul K. Ogden said...

I looked at the chapter again yesterday. Although the entire chapter deals with muni corps, including specifically hospital ones, the 4 mile statute in that chapter talks about "muicipalities" which is defined in another part of the article as cities and towns.

Still there may be other sections of the code that apply, including ones limiting the mission of the muni corp to a particular purpose.
I highly doubt that the legislature intended HHC-MC to run around the state buying up nursing homes when it was created.

Ed Coleman said...
This comment has been removed by the author.
Ed Coleman said...

Paul,

Everyone of the facilities on your list are owned by American Senior Communities. I know because I work for American Senior Communities. Last word I had is that the only one HHC owns is Lockfield Village right across from the current hospital.

Call me and I will verify it for you.

Paul K. Ogden said...

Ed, thanks for the info. That's just the ones I took from the SOS website. I don't know if it's the same list that Gary had. His came from a different source.

Advance Indiana said...

Ed, I'm not trying to embarrass you, but your information doesn't jive with the IBJ's recent report by J.K. Wall. As he explained, ASC manages the facilities owned by HHC:

"Health & Hospital launched its nursing home gambit in January 2003 when it spent $9.7 million to buy 12 nursing homes-including Rosewalk Village-from a company affiliated with Indianapolis-based American Senior Communities LLC.

The home management company had been trying to turn around the facilities for a couple of years, but lacked the capital to do it. So Health & Hospital promised to invest $1.7 million a year to improve the homes and hired American Senior to keep managing them."

Paul K. Ogden said...

It sounds like American Senior is the manager and not the owner then.

It looks like to me the purchases would have had to date back to early 2002, not 2003. They were filing assumed name certificates in early 2002.

Advance Indiana said...

The State's website for licensed nursing homes in Indiana makes clear HHC is the owner of the facilities.

jabberdoodle said...

I'd like to know if these nursing homes care for the indigent.

William said...

A healthy skepticism is definitely needed in that factor. I hope they can settle that issue immediately.

nursing home

Sam said...

The issue should be decided before anything else to avoid further problems. They should have some kind of debate about that.

hospice care

Angelica Purifica said...

I also wonder who is profiting from these non-profit corporations. Anyhow I don’t see in the list the nursing homes in NJ where my grandmother is in.

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