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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndiana’s largest nonprofit hospitals are sitting on billions of dollars in net assets, and many have enough cash on hand to cover operations and payroll for a year or more, a state legislator said Friday.
Sen. Travis Holdman (R-Markle) questioned whether the hospital systems are doing enough to make health care affordable for Hoosiers.
“These giant hospital systems don’t pay taxes because they theoretically exist for charitable purposes, but the most charitable thing they could do with their massive reserves is lower the prices they charge Hoosier patients,” Holdman said in a press release.
In response, the Indiana Hospital Association said the state’s nonprofit hospitals have a long history of providing health care for all, including those who cannot pay.
“As part of their charitable missions, Indiana’s nonprofit hospitals provide $3.9 billion in total benefits to the community, which exceeds the value of their tax exemptions by $2.3 billion,” the IHA statement said. “In other words, the total benefit Indiana’s nonprofit hospitals provide their communities is nearly two and a half times the tax exemptions they receive.”
It said Indiana hospitals offer a wide range of financial assistance services to reduce patients’ health care expenses and provided $700 million in free care across the state in 2023 – a 22% increase over the year before. “This far outpaces national growth in charity care, which increased 8% during this time period, the association’s statement said.
Indiana has the eighth highest hospital costs in the nation, according to the latest annual study by the Rand Corp. in May.
Indiana employers and employees are paying nearly three times, or 297%, what Medicare pays for the same services at the same hospital, the study concluded. That’s higher than the national average (254%), and higher than neighboring states Michigan (192%), Kentucky (231%), Illinois (247%) and Ohio (277%).
Holdman pointed to the 2023 audited financial statements of the six largest nonprofit hospital systems, filed with the Indiana Department of Health. They show the systems have net assets ranging from $1.8 billion for Deaconess Health System to $24.8 billion for Ascension. (Ascension’s numbers include 19 states, not just Indiana.)
Holdman has not yet filed any bills for this year’s legislative session in connection with the issue. Nor is he listed as a member of the Senate Health and Provider Committee.
The six hospital system highlighted by Holdman cover Ascension St. Vincent, Community Health Network, Deaconess, Franciscan Alliance, Indiana University Health and Parkview Health System.
According to information in the 2023 audited reports, the health systems had enough unrestricted assets to cover operations for the following number of days:
- Ascension St. Vincent, 260 days
- Community Health Network, 212 days
- Deaconess, 369 days
- Franciscan Alliance, 396 days
- IU Health, 456 days
- Parkview Health, 341 days.
“As a fiscal leader at the Statehouse, I understand there is a real need to have some cash reserves in order to weather unforeseen circumstances,” Holdman said in written remarks. “However, while the state government typically hovers around 40 operational days, we see most of these nonprofit systems with enough assets cover 250 days and beyond, with 250 days being the high end of the range for S&P’s ‘very strong’ rating. In my opinion, that goes beyond prudent asset management and looks more like hoarding. I expect better from these nonprofit hospitals.”
The Indiana Hospital Association said financial reserves ensure that hospitals can weather the storm and sustain the needs of their patients and community.
Although there has been a lot of legislation in recent years about hospital price reductions, insurance companies have not been required to pass on the cost savings they receive from hospital price reductions to employers and consumers, the association said.
“Hospitals have demonstrated their commitment to responsibly lowering prices, but employers and other consumers won’t realize any benefit from these reductions until insurance companies are required to pass along those savings,” the hospital association said.
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Hospitals measure their charity care based on their charge master at gross fees. They do not collect anywhere near their gross fees so their measure of charity care is grossly overstated. I believe their true net charges would be approximately 33% of their gross charges. Since the net charge is really what they can expect to collect charity care should be measured on the same metric. However, by using this “overstated” number they look more charitable.