State senators introduce legislation to curb Indiana hospital construction projects

johnson county micro hospital
Rendering of the recently completed $50 million micro-hospital and health complex in Greenwood.

Legislation has been introduced to try to limit hospital construction in Indiana, purportedly to curb new private hospitals in higher-income neighbourhoods, which then siphon off revenue and create problems for established hospitals that must serve poorer people and those relying primarily on Medicare and Medicaid.

“It’s been a hospital arms race,” Sen. John Ruckelshaus, R-Indianapolis, said of a recent building boom.  He said the clustering of construction in high-wealth areas would ultimately drive up health care costs for Hoosiers, the Fort Wayne Journal Gazette reports.

Senate Bill 573 would require projects of more than $10 million obtain a Certificate of Need from the Indiana State Department of Health.

New projects now go through health and safety checks to be certified as a hospital but don’t need a certificate of need, the newspaper reported, noting that two major Fort Wayne projects in the works could be affected by the proposed law.

The Indiana Hospital Association opposes the law. IHA president Brian Tabor said more than 30 states have a certificate process but the trend is moving away from the requirement.

Indiana previously had a Certificate of Need when federal regulations required it but the state repealed the requirement more than 25 years ago.

“What I’ve learned – both anecdotally and in research – is a certificate of need in hospital markets does not control or reduce costs,” Tabor was quoted as saying. “What is does is create an environment where projects end up being litigated, drawn out and you enter into a realm of very subjective decision-making.”

He said Ruckelshaus’ bill would apply for hospitals planning repairs and remodeling costing $10 million or more, as well as new structures.

Tabor said Indiana has between 120 and 130 acute care community hospitals. However overall there are 180 licensed facilities statewide, including long-term acute care or rehabilitation hospitals, psychiatric facilities and others.

He said many construction projects around the state are replacement structures, including  an expansion/renovation project at Cameron Memorial Community Hospital in Angola. Lutheran Health Network also plans a $120 million replacement for St. Joseph Hospital in Fort Wayne.

Both of those are in rural or high need areas, Tabor said, and aren’t the specialized hospitals Ruckelshaus is worried is siphoning all the private pay customers.

“Cost is incredibly important, and I understand why people are concerned but this is not the answer,” he said.

Ruckelshaus said constituents have expressed concerns about a new project in a higher-income area of Indianapolis. “Building there and trying to draw the private pay makes it harder for other hospitals who get most of the low-income patients,” the newspaper reported.

Lawmakers had earlier put a moratorium on new nursing homes because of this issue.

Ruckelshaus argued hospitals aren’t truly part of the free market system because much of the money that flows through is from the government – either through Medicare or Medicaid covering seniors, the poor and people with disabilities.

However Tabor was quoted as saying that the two situations are different because of how they are financed by government programs.

“Competition and market forces are at work with hospitals,” he said. “It’s service based. The dollars follow the patient.”

The Journal Gazette says Ruckelshaus also filed a companion bill to study the topic in the summer should it become too controversial. “Both are co-authored by Sen. Ed Charbonneau, R-Valparaiso. He chairs the Senate Health Committee and controls what legislation gets heard.”

Ruckelshaus was quoted as saying the general plan will be a hearing and then a decision on what approach is the best.


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