How do non-profit hospitals impact Indiana’s economy?

Local News

Fort Wayne, Ind. (WANE) – A Ball State economist recently released a study that suggests Indiana’s five large not-for-profit health systems are hurting the Hoosier economy, which the Indiana Hospital Association sharply denies.

Dr. Michael Hicks, director of the Center for Business and Economic Research at Ball State University, says the markets exhibit broad signs of monopolization, which allows higher prices.

He adds that those hospitals then fail to reinvest enough of their earnings into Indiana.

Brian Tabor, President of the Indiana Hospital Association, says the study is deeply flawed.

“Indiana’s not-for-profit hospitals are absolutely committed to improving public health and investing in their communities,” Tabor writes.

“The annual benefit they provide approaches $2.5 billion for the most recently available data. This community benefit is ignored in the Ball State report and includes providing financial assistance, training medical professionals, conducting life-saving research, and much more. The report also fails to acknowledge hospitals’ significant, positive economic impact.”

Parkview Health declined an interview for this story. They did provide 2017 data to show their local contributions of over $17 million, an amount similar to what Lutheran Health paid in local taxes that year.

IU Health had not entered the Fort Wayne market in 2017 and has no local hospital. The offices are a partnership between Indiana University Health and locally owned Kyber Health. The tax status of that partnership is unclear.

Hicks suggests additional research into not-for-profit hospitals. He also offers three broad policy proposals:

  • Restore competition to not-for-profit hospital and healthcare markets by taking a number of steps from anti-trust enforcement, ending certificate of need and local non-compete clauses, and consider broad legislation requiring vertical and horizontal disintegration of these markets.
  • Tax not-for-profit healthcare provides who earn accrued profits at rates consistent with private sector firms (Healthcare Assessment Fee extended to investment holdings, additional corporate, sales and property taxes).
  • Impose significant taxes and restrictions on the more than $27.7 billion in accrued profits held by Indiana’s not-for-profit hospitals.

Tabor says not-for-profit hospitals are an economic engine and the statehouse should tread lightly. He points out that Indiana has not had “certificate of need” for hospitals in 20 years.

WANE 15 has contacted a number of Indiana legislators. None have confirmed plans to hold hearing on the Ball State study.

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