Modern Healthcare - - REGIONAL NEWS -

CHARLESTOWN, Ind.— The CEO of an In­di­ana hos­pi­tal on the brink of fi­nan­cial in­sol­vency is protest­ing an in­crease in state Med­i­caid rates. Mer­lyn Knapp, pres­i­dent and CEO of 64-bed St. Cather­ine Re­gional Hos­pi­tal, said an in­crease in Med­i­caid rates for In­di­ana hos­pi­tals re­cently an­nounced by Gov. Mike Pence fails to ac­count for two years’ worth of fi­nan­cial dam­age wrought when state law­mak­ers cut the rates in 2010. Like other states in the wake of the Great Re­ces­sion, In­di­ana cut its Med­i­caid rates while levy­ing new taxes on hos­pi­tals. The new taxes were sup­posed to be used to in­crease state spend­ing on Med­i­caid, which in turn would in­crease fed­eral Med­i­caid match­ing funds so the cost of the tax is cov­ered by the in­crease in fed­eral funds. For Knapp’s hos­pi­tal, it hasn’t turned out that way. St. Cather­ine, an in­de­pen­dent for-profit hos­pi­tal in south­ern In­di­ana, filed for bankruptcy pro­tec­tion in the mid­dle of a twoyear pe­riod from 2011 to 2013 in which hos­pi­tals across the state had their Med­i­caid funds with­held to pay for the tax in­crease. In May, Knapp told U.S. Bankruptcy Judge Basil Lorch III that the hos­pi­tal was weeks from be­ing forced to close be­cause it hadn’t been paid by Med­i­caid since Au­gust 2012. State of­fi­cials say the hos­pi­tal owes a to­tal of $2.3 mil­lion for its two-year as­sess­ment. Lorch or­dered the state to be­gin pay­ing the hos­pi­tal for its Med­i­caid pa­tients. He also or­dered the state to cease ef­forts to col­lect the tax from the hos­pi­tal be­cause the en­hanced fee was con­sid­ered a debt that pre-dated the bankruptcy fil­ing—a rul­ing that came in a pre­lim­i­nary in­junc­tion that hos­pi­tal of­fi­cials are now try­ing to make per­ma­nent. In June, of­fi­cials with Pence’s of­fice and the In­di­ana Hos­pi­tal As­so­ci­a­tion praised the an­nounce­ment of an in­crease in Med­i­caid rates as im­por­tant for hos­pi­tals. In a let­ter to Mod­ern Health­care, Knapp wrote that the rate hike “only elim­i­nates the re­duc­tion, while leav­ing in place the neg­a­tive im­pact the orig­i­nal re­duc­tion had on cash flow.” He urged other hos­pi­tals to an­a­lyze their own fis­cal im­pact and con­tact law­mak­ers with the re­sults.

—Joe Carl­son HAN­COCK, Mich.— The Portage Health board of di­rec­tors has signed a de­fin­i­tive agree­ment to form a joint ven­ture with pub­licly traded Brent­wood, Tenn.-based LifePoint Hos­pi­tals. The agree­ment, which in­cludes $60 mil­lion in cap­i­tal in­vest­ments over the next 10 years by the new joint ven­ture, would al­low Portage Health to ex­pand and en­hance its ser­vices in Michi­gan’s western Up­per Penin­sula. Portage Health and LifePoint would jointly own and op­er­ate Portage Health and its af­fil­i­ated as­sets. LifePoint would own 80% of the joint ven­ture, while Portage Health would have a 20% own­er­ship stake. In ad­di­tion to the $60 mil­lion in cap­i­tal in­vest­ment by the joint ven­ture, ap­prox­i­mately $40 mil­lion would be used to cre­ate a lo­cally gov­erned char­i­ta­ble foun­da­tion to fund or­ga­ni­za­tions that sup­port cru­cial com­mu­nity needs. An eight-mem­ber gov­ern­ing board with equal rep­re­sen­ta­tion from Portage Health and LifePoint would be es­tab­lished. The de­fin­i­tive agree­ment is sub­ject to re­view by the Michi­gan at­tor­ney gen­eral.

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