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New tax targets local hospital

August 23, 2012

    Back in June, Adams Health Network (AHN) President and Chief Executive Officer Tom Nordwick discussed a looming situation that was going to have a negative effect on the financial picture of the network.
    Nordwick told the five members of the AHN Board of Trustees at their monthly meeting Wednesday that the bullet aimed at Adams Memorial Hospital (AMH) could conceivably do more damage than initially thought as a hospital bed tax passed by the Indiana General Assembly could cost the hospital up to $1.2 million per year.
    To put it in perspective, Nordwick noted the tax amounts to more than the entire amount received in one year by the hospital to treat Medicaid patients. Last year, AMH received about $900,000 in state funds from the Medicaid program or $300,000 less than the tax for the entire year.
    Nordwick called the bed tax "an unfair tax" and led a discussion with trustees about what they could do. The discussion included getting involved with area legislators in an attempt to rework the structure of the bed tax to make it more fair but Nordwick said he wasn't sure legislators would be sympathetic to their cause.
    Part of his reasoning stems from the fact that only about 10 percent of the hospitals in Indiana (between 8-10) will be paying more tax than Medicaid payments received. Nordwick said he intends to find out which other hospitals are in the same boat the local facility is and will try to work with them to find solutions.
    One such hospital that he is aware of that has been affected like the local facility is Jay County Hospital in Portland, but he thought it would not be hurt as severe as will be AMH.
    Nordwick said the bed tax became popular with state officials because "it gave them hundreds of millions of dollars they never had before. There were options available for the hospitals (that are going to lose money), but the legislators didn't study the issue enough. For example, they could have chosen to exempt governmental hospitals like ours, but that wasn't done."
    Hospitals that will reap the benefit of the "bed tax" are facilities that serve a larger Medicaid population. Nordwick said said about 15 percent of the outpatient business at AMH is Medicaid-related while about 10 percent of the in-patients are Medicaid. A unique situation in Adams County is that nearly 20 percent of the overall population is Amish. Many of them would qualify for Medicaid but do not seek its coverage.
    Nordwick said having more Amish in the program would probably double the current Medicaid level.
    One area hospital, DeKalb Health in Auburn, is doing exactly the opposite of AMH. "They are probably going to profit as much as we lose," Nordwick said.
    There are several programs that AMH could benefit from, however, to offset the "bed tax."
    The Indiana Hospital Association (IHA) has established a voluntary contribution program that encourages hospitals who have greatly benefited financially from the tax to assist hospitals that have been hardest hit. Also available is a pool of money from the state's Disproportionate Share Program that helps cover uninsured patients.

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