Tuesday, December 1, 2009

Health & Hospital Pulls Bait and Switch on Taxpayers; Council Ratifies Marion County Building Authority's Fake Ownership to Evade Legal Debt Limit

I didn't get to stay for the Wishard vote at the City County Council last night. Fortunately, Gary Welsh of Advance Indiana reports on the bait & switch tactics where now we now learn AFTER the referendum vote that Health & Hospital Corporation intends to use part of the money, backed by taxpayers, to pay debt:

Last night, the Indianapolis City-County Council approved the borrowing and expenditure of $853 million for the new Wishard Hospital by a vote of 23-3. This includes $703 million in new borrowing and $150 million in cash reserves. Property taxes are pledged to support the general obligation bonds that will be issued to finance the project. There's a new twist in the financing. About $60 million in old debt of the Health & Hospital Corporation will be rolled into the new debt offering by the Marion Co. Building Authority. Yes, they're stretching out debt payment on old debt to 30 years to make the HHC's financing scheme work. And yes, this hospital project will cost more than $700 million to build, notwithstanding assurances to the contrary.
Not once in the literally hundreds of public meetings leading up to the vote did Health & Hospital CEO Matt Gutwein mention that part of the money borrowed would go to pay off old debt. This sort of rollover of debt is reminiscent of the substantial RCA Dome debt was simply rolled into the Lucas Oil Stadium debt. It makes one wonder what is the next bait and switch tactic revealed. My guess is that Gutwein's election promise to pay for the project out of the Wishard's will bite the dust soon.

Welsh continues:

The discussion of the project, which lasted all of about 10 minutes, was a complete embarrassment to the public. Nobody on the council understood how the transaction was being financed well enough to explain it. HHC CEO Matt Gutwein, who had not been scheduled to testify, had to be called up to explain what was happening to the little boys and girls in the room. The Bond Bank is issuing the bonds on behalf of the Marion Co. Building Authority, which will own the hospital property for at least 30 years. The HHC will lease the new hospital from the building authority. Although it doesn't hold title to it, HHC will approve all construction contracts and approve payments for the construction work.

Why is the Marion Co. Building Authority borrowing the money instead of HHC asked one councilor? State law limits the debt of HHC, and this amount of borrowing would surpass the state debt limit for HHC. To skirt state law, the Marion Co. Building Authority will pretend to be the owner and borrower. To pay the bond debt service, HHC will rely on about $40 million a year it anticipates taking from nursing homes it pretends to own and operate. They are actually owned and operated by American Senior Communities. In order to defraud the federal government out of hundreds of millions in Medicaid payments, the HHC conjured up this scheme which allows ASC to receive double the reimbursement rates that other nursing homes in Indiana receive. ASC kicks the extra reimbursements back to HHC, which is using the money to feed the construction cartel that has a stranglehold over Marion County government because it bought and paid for all of the key decision makers.
Why isn't anyone on the council concerned about having the Marion County Building Authority being involved in a fake ownership scheme in order to evade state law? Then again, why should they? Health & Hospital's fake ownership of nursing homes to get the federal government to pay inflated Medicaid reimbursements hasn't stopped council members support of the project. Of course, it is simply a matter of time before H&H is investigated by the federal government and ordered to repay the extra Medicaid payments it is receiving due to the fake ownership of those nursing homes. Unfortunately, when that happens, it will be the taxpayers footing the bill for Health & Hospital's efforts to defraud the federal government.


Diana Vice said...

Has anyone ever challenged this legal loophole in court? Schools do this all the time to bypass the debt limit on borrowing, and it is maddening.

Citizen Kane said...

The entire system of having multiple municipal authorities who can have debt levels equal to the assessed value in their jurisdiction, is a scam in and of itself. Then having the legislature and the courts permit these lease agreements to circumvent the constitutional limits should be sufficient proof that the people that we keep electing have not, do not and will not ever protect our interests. There intention is to perpetuate the status quo, which involves the transfer of money to those they favor (mostly themselves and their contributors).

Camilla Richards said...

Well, we still can see how many problems can be solved through borrowing money. Healthcare is very expensive and financed through taxpayers money but sometimes it’s just not enough. Many people borrow money and use instant money advance online to finance medication. I think that the government should try to reduce healthcare costs and make essential things available for consumers. And I hope that these new debt will help to improve the situation.