Friday, September 25, 2009

Wishard Breaks Promise of No Property Taxes For New Hospital; Proposes Borrowing $703 Million To Be Paid Off By Property Taxes

Pat Andrews over at "Had Enough Indy" reports on the bonding resolution adopted by the Health & Hospital Corporation of Marion County.

Let's recap. During the special legislative session to deal with the budget, lobbyists for Health and Hospital Corporation of Marion County had inserted into the budget language that would allow HHC-MC to submit a referendum question in a special election this November for the purpose of borrowing money to build a new Wishard Hospital. Originally, HHC-MC's lobbyists tried to do it through a simple petition but their efforts were rejected by Chairman of the Senate Finance Committee Luke Kenley who insisted that HHC-MC at least submit the question to the voters regarding borrowing money for the hospital.

HHC-MC, however, had other ideas. Instead HHC-MC wrote a referendum question that didn't mention a new hospital or how much the he municipal corporation intended to borrow money to pay for the project. Below is the referendum question:

"Shall the Health and Hospital Corporation of Marion County, Indiana, issue bonds or enter into a lease to finance safe, efficient and functional facilities for the Wishard Hospital project:

1. to allow Wishard to provide access to care for all residents of Marion County, including people who are seniors, poor uninsured or vulnerable regardless of their ability to pay; and

2. to allow Wishard to provide specialized care, including to victims suffering from traumatic injuries or severe burns; and

3. to allow Wishard to work with colleges and universities including Indiana University School of Medicine, Ivy Tech Community College, and the Purdue School of Pharmacy, to teach future doctors, nurses and other healthcare professionals in Indiana?"
Over the past few months Matt Gutwin, President and CEO of HHC-MC and Dr. Lisa Harris, CEO of Wishard have been making the rounds assuring anyone who would listen that the hospital would not be paid for with tax dollars.

So much for those promises. In a resolution adopted today by its Board, HHC-MC indicated that it would be borrowing up to $703 million dollars and that "all or any portion" of the $703 million in bonds would be paid for with property taxes. Additionally, according to the resolution, HHC-MC isn't floating the bonds at all. Rather the Indianapolis-Marion County Building Authority will be borrowing the money and will lease the facility back to HHC-MC. Since HHC-MC is a corporation and I don't believe the Building Authority is, that would mean taxpayers would not at least enjoy the protection of HHC-MC's corporate status. In the face of a financial meltdown, at least in theory, HHC-MC could declare municipal bankruptcy and have legal obligations to repay the bonds discharged. For the Building Authority to do that, the entire City of Indianapolis would have to declare bankruptcy.

Is anyone really surprised that HHC-MC reneged on its promise and intends to pay for the new hospital with property taxes?

See Advance Indiana's last blog post on the issue by clicking here.


Downtown Indy said...

On the contrary, it was probably planned from the outset.

First, you talk up the project and promise one thing - until people are so sick of hearing you that they tune you out when you start speaking.

Next, you change your sales pitch, knowing full well most people are not listening anymore.

Simple, eh?

Paul K. Ogden said...

DI, I agree that this was planned from the beginning.

Had Enough Indy? said...

If they expect my vote, I expect to see it in writing that bonds will not be paid back with property taxes. Since they are telling us there will be no property tax revenues used, they should be willing to put it in writing and reissue the public notice.

The use of the Indianapolis-Marion County Building Authority does raise questions. Like, why go that route? Sounds like an unnecessary complication.

At least there is a maximum dollar amount described. IF the public notice does commit, somehow, the referendum to that dollar amount, it is an improvement in the referendum.

This, of course does not mean that the project will cost only $704Million, because they can toss in their $150M in cash reserves and add on any donations to the cause.

I need an aspirin.

Gary R. Welsh said...

Pat, Don't you understand? They could never issue bonds in this market unless they pledged property taxes or raised another tax and dedicated the revenues from that tax to pay off the bonds. It's just that pure and simple.

Had Enough Indy? said...

The airport doesn't secure their bonds with property taxes; they use revenues. That is what I was told would be used to secure the new Wishard bonds, and specifically told that property taxes would not be used.

I know we aren't arguing over these things. I just feel that if they sell me on 'no taxes' then they should be able to put it into writing. If they can't put it into writing then they should stop selling the project on 'no taxes'. I think it might be what they refer to as 'clear and transparant government'.

I feel a rant coming on, so I'll spare you all and go watch some TV - fiction.

Carl E Moldthan said...


My name is Carl Moldthan and during the past two months I have looked at HHC’s budget, the CAFR’s for the past five years, their tax stream, the Special Funds they receive from Medicaid, the nursing homes they own and virtually everything anyone can think of. The truth is as I will explain:
Wishard owns 37 nursing homes which they receive approximately $17 million a year in revenues from. They also receive, as of 2008 $51 million from Medicaid’s special funds called Upper Payments Limits (UPL). These UPL funds make up the gap between Medicaid and Medicare for nursing home residents. As an example, a normal Indiana nursing home receives approximately $3,400 to $3,900 per month, per patient. However, HHC receives on average approximately $8,200 per patient, per month. These extra funds give HHC an advantage over other nursing homes because they can do improvements and repairs that other nursing homes cannot afford. This is one reason why HHC should NOT own nursing homes.

It is these extra UPL monies that are supposedly going to pay for the Bond Issue. In the real world these funds could be considered or identified as revenues. However, because they CANNOT guarantee these funds HHC must back these bond issues with General Obligation Bonds, thus the referendum. It makes no difference who is going to lease this or that building to or from whom. I can assure you that this has been planned for 7 years and HHC is not going to allow a mistake to take them down. The only method of bring them down is stopping the bond issue.

There are several things that can bring this bond issue to the point where we have to pay for it but the main two are:
1. Voters stop the BOND ISSUE.

2. If enough nursing homes in other cities complain to their respective Congressman, US Senator, State Senator or Representative there will be a huge hue and cry to close the loophole that allows HHC to own these nursing homes that is assuming that it is legal in the first place. This would cut their stream of UPL money thereby ending the revenue stream and starting a huge property tax increase on all of us. The sad thing is that this tax may NOT BE INCLUDED in the Property Tax Cap by the time we have to start paying for it. The cost to an average taxpayer who owned a house valued at $150,000 would be an extra $175 per year. “Do you feel lucky, well do ya taxpayer?”

3. The Medicaid money received for these nursing homes could be shut off tomorrow without notice by Medicaid. This type of Medicaid has been under investigation by the GAO and Congress for the past 8 years. The reason for the problems is the fact that so much money can be obtained and UPL money amounts are uncontrollable. Congress has referred to UPL as a SCAM. When it involves this type of money one has to ask the important “What If” questions. What if 10 other communities learn about the EASY method of building a new hospital and instead of $42 million per year (BOND COST PER YEAR) Medicaid is paying out $420 million a year? Medicaid would put a stop to this immediately and again the Taxpayers of Marion County would have to pay.

There are several other things that can happen but these two are the most probably. I like to think back to 1983 when then Mayor Hudnut promised that the 2% Food and Beverage tax would disappear after the $75 million Dome was paid for. Now, 25 years later we still owe $69 million on the Dome which if you’ve looked lately isn’t there, and the Food and Beverage tax is at 7%.

“Well, do you feel lucky, well do ya taxpayer?”

We all need to focus on one thing and that is beating the bond issue. The who, what or where doesn’t matter, the ONLY thing that matters is stopping the BOND ISSUE. If you have any question you can reach me at
Thank you for your time.


Downtown Indy said...

Carl that is amazing they are raking in more than double the 'going rate' for nursing home care.

How is it they are able to get that extra money per patient vs other nursing homes? Are they supposedly providing a greater level of care or just bilking the system of more dollars?

Sounds like their game is 'oh no we won't use tax dollars' but hedging that with the referendum just in case. And it sounds like there's a good chance their 'Plan A' will fall through, just a matter of time. And then the hedge pays off (for them) by sticking taxpayers with the bill. They will then plead for forgiveness citing 'unforeseen circumstances beyond our control.'

Gary R. Welsh said...

Carl does a great job explaining the Medicaid bilking scheme HHC has concocted. The idea that HHC owns any of these nursing homes is purely illusory. It simply leases them from Eagle Care with a commitment to make minimum capital investments in them and then turns around a leases them to American Senior Community to operate. They are for all intents and purposes privately-owned nursing homes operated by a for-profit company. This scheme has been divised to allow HHC to skim Medicaid dollars from the federal government that it should not be getting. If a private business concocted such a scheme, it would be prosecuted by the federal government for criminal fraud. The HHC is apparently above the law.

Carl E Moldthan said...

HHC receives an average of $12,344 for Medicare patients and the difference between the normal average of Medicaid (which is $4,749) and the Medicare is the UPL figure. The why is because they are a Disproportionate Share Hospital (DSH) ($126 million in 2008) which is a hospital that receives extra money for caring for a disproportionate number of indigent patients. If we do not stop this the effect on this community if their little plan fails will have earth shattering affect on our community. That is the largest tax increase I have ever seen for any bond issue in Indiana. The Department of Local Government Finance is looking into the fact that HHC didn’t get the question certified.

Pete Boggs said...

Many thanks to Carl for his ongoing hard work on behalf of citizens & taxpayers, in exposing this referen-dumb.

Carl E Moldthan said...

More Information:

I have spent the last 10 to 15 years in and around nursing homes as a previous owner of an ambulance service. The nursing homes that HHC owes belonged to American Senior Communities (ASC) which is owned by the Jackson Brothers. HHC turned around and hired ASC to manage them for HHC. So unless ASC is a bad manager and if they are why did HHC hire them, these nursing homes were doing quite well. For 2009 from January to June 30th these nursing homes have made a profit of $5 million and paid out over $7.2 million in management fees to ASC. Furthermore, HHC has paid over $17 million for leases through June 30, 2009. Most of that $17 million has gone back to the Jacksons who own several of the buildings. It is hard to believe that the Jackson Brothers who own ASC could be accused of running bad nursing homes.

One question, if this is such a great deal why does HHC or the Jacksons have a put (buy out) in their contract. If HHC can’t get this deal through HHC can sell the nursing homes back to ASC but HHC has to pay a $4 million fine if it is done before 2012, if done after 2012 the fine is $7 million. More information to come.

Carl E Moldthan said...

FYI: This Monday (9/28) on Abdul In The Morning Show (WXNT, AM 1430), the Indianapolis Taxpayers Association will present organized opposition to Wishard Hospital & Indiana University's proposed property tax increase.

Jon said...

Carl, so if I understand correctly, the HHC is pushing the bond issue because Medicare may cut of UPLs and thus HHC would lack sufficient revenue to pay for their new facility?
How can the Star promote this referendum when HHC blantly distorts the truth? 700 million in new debt will increase taxes.

Carl E Moldthan said...

To Jon:

The feds at anytime may cut UPL, MEDICAID which would close down HHC's plan and end up costing the taxpayers. I have no idea how the Star promotes anything. I guess they believe in fairy tales, because that's what this plan is. You would think that before they supported anything that has this much risk they would investigate it and at the very least identify the risk and be honest and let their readers know of the risk. What surprises me more is the Chamber and other business groups who support this scam. If they look into their investments as they looked into this it’s a wonder we all aren’t unemployed.

If this plan had a stable revenue source it would qualify to be a revenue bond. Why isn’t it a revenue bond? Well, because the bank who is putting up the money knows the risk and wants a stronger revenue source, our property tax dollars. The Airport and CIB know the source of revenue they back their bonds with and the bank trusts them, Why don’t they trust HHC? Is there a problem? Is there something wrong? This is like a roll of dice and the odds are, it will come up snake eyes.

I wish with all my heart there was a way we could hold all of these people responsible for leading the people down the path to bankruptcy. If only these people would have to pay in some way if a scheme like this doesn’t work.

I still look back on the old days when Bill Hudnut said the 2% Food and Beverage Tax would go away when the DOME was paid for. The Star supported that also. Now, 25 years later we still owe $69 million (according to the Star) on the Dome and the Food and Beverage Tax is at 7%. Thank you, Indianapolis Star, every time I go out to eat I’ll think of you. We know we can’t believe in our politicians but you would think we could trust our newspapers. It’s a sad world when you can’t trust either.


Had Enough Indy? said...

Forgive me Paul, but I a know I read an entry in one or another blog about H&H bonds being secured with property taxes, and I can't find which one brought up the IU Medical School sweetheart deal for using Wishard as its teaching hospital.

So with your indulgence, let me bring it up here. Doctors usually have to pay a fee to use the facilities of any and all hospitals within which they practice medicine. Now, some may not need to do part of their practice in a hospital setting, but many do, and the IU professors are using Wishard for some of their medical practice. I think it is called an 'attending fee' that M.D.s pay to the hospitals they use - it pays for the part of the overhead for the building and equipment and scheduling and account, etc., functions of the hospital.

I have no idea how much money that is. I do know researchers pay arms and legs in fees to use the rooms in which they do their work, though. IUPUI depends upon these fees to survive, no doubt.

IU pays nothing to Wishard for the use of their facilities. I can see Wishard paying the M.D.s for their services that have actually been reimbursed by insurance or Medicare/Medicaid, but there should also be money paid to Wishard for the privilege of using their facilities and equipment. The fact that it is not being done should raise a red flag and it deserves full disclosure as to why not.

If the Marion County taxpayers are to be on the hook to repay $703M in bonds for the new Wishard -- IU should have real 'skin in the game' as well.

Carl E Moldthan said...

Thanks Had Enough:

It is about time someone looked into the manner in which IUSOM has been ripping off Wishard and the taxpayers of Marion County. Wishard has been paying IUSOM over $46 million (2008) just for Hospital Doctors and this does not include what has been paid for IU Medical Group. They have an incentive contract with Wishard that can cost them a fortune.

If you just look at the $46 million you could hire 184 doctors at $250,000 each per year. When I asked Dr Harris at the meeting, how many doctors Wishard had she stated it was 30. Just how many doctors do they get for $46 million? IU has this feeling that they do the work of God and should not be questioned. This has been this way since Beering was there. They don’t think they have to answer questions from us peons.

Had Enough Indy? said...

Carl - we are only peons if we act like peons at the referendum.

Unigov said...

I realize this is late but...Wishard accounts for only about 7% of inpatient stays in central Indiana.

Wishard could CLOSE as an inpatient facility and the slack could be taken up by the other hospitals - esp with St Francis having so much excess capacity in Beech Grove.

But, as I've said before, unless buildings are torn down and reconstructed, there's no graft.

Unknown said...

Great Post! It's very nice to read this info from someone that actually knows what they are talking about. non performing notes for sale