HANCOCK COUNTY — A statewide analysis released this month shows Indiana hospitals are operating under slim margins throughout the state.
Steve Long, president of Hancock Health, said operating revenues are also bleak for the Greenfield-based healthcare company, which includes Hancock Regional Hospital.
“We are not immune. It’s affecting everybody,” he said.
According to Kaufman Hall, which provides financial and performance consulting services, Hoosier hospitals operated on a cumulative 0.9% operating margin in 2023, compared to an average 2.3% margin nationwide.
The numbers show a slight improvement compared to 2022, when Indiana hospitals operated on a -2% loss.
“While conditions improved slightly for Indiana hospitals relative to last year, their financial sustainability remains at risk,” said Erik Swanson, Senior Vice President of Data and Analytics at Kaufman Hall.
“To be in good financial standing, a hospital should operate within a 4-6% margin. At current levels, Indiana hospitals are barely breaking even, which is simply unsustainable,” he said.
Long said he remains optimistic about Hancock Regional, however, given the hospital’s position within the fastest growing county in Indiana.
He’ll share a detailed overview of the situation June 21 at the Sue Ann Wortman Cancer Center in a public presentation hosted by the Hancock Health Foundation.
Long said the huge spike in inflation as a result of COVID has caused costs to rise across the board, as much as 25% in some areas. Those inflated expenses result in higher bills for patients, he said.
“Everybody has felt that (impact of inflation) across the board, but it has been most acutely felt in hospitals,” he said.
Despite double-digit inflation, “Insurance reimbursements have only gone up about 6%. That means you have to figure out how to do this differently,” said Long.
The CEO went on to share that Hancock Regional has a lot of things working in its favor, like a strong balance sheet.
“We are very strong financially,” Long said. “We’ve got a very strong balance sheet, a lot of investments and cash on hand. We also have a growing county. We’re the fastest growing county in the state.”
Whereas other hospitals are being forced to make cuts to control costs, Long said Hancock Regional is able to grow its services due to the growing number of patients in the area.
“Our entire strategy is around growth and becoming more efficient,” he said.
Hancock Health has a huge nest egg in the development of Gateway Park, a multi-acre parcel slated for mixed use development just off the Mt. Comfort interchange at I-70.
The health company owns and sells the land, which so far includes the Gateway Imaging center, Starbucks, a senior living community and residential subdivisions. A pediatric dental office is currently under construction.
Long said the high-rise buildings now under construction by the interstate are the first phase of a three-phase development that will include a mixed use of high density residential, retail and some commercial properties similar to those found in the Fishers District in Hamilton County.
“Gateway Park is a long-term investment for us,” he said. “As we sell the land we are selling it for a profit.”
That’s a great position to be in, considering the recent Kaufman Hall study said the financial stability for many Indiana hospitals is rocky.
The study pointed out the sharply rising expenses for hospitals throughout the state.
Expenses for medical supplies increased 10.3%, non-labor expenses rose 9.7%, and other expenses including the Hospital Assessment Fee – the tax hospitals pay to help fund Indiana’s Medicaid program – increased 9.5%, a much higher rate than hospitals faced on average nationally.
According to the report, Indiana hospitals’ low Medicaid rates, which rank far below the national average, also contributed to significant financial challenges.
“The financial strain on hospitals is of great concern as expenses rise and government reimbursement covers far below the cost of care – especially in Indiana,” said Brian Tabor, president of the Indiana Hospital Association. “Our hospitals remain committed to providing quality care across the state, but we must ensure they have the resources they need to remain viable in their communities.”
Kaufman Hall reported that Indiana hospitals’ net patient revenue per adjusted discharge decreased in 2023 while hospitals nationally experienced an increase, heightening the strain on Hoosier hospitals grappling with rising expenses.
Despite these challenges, Indiana hospitals provided a 22% increase in free care to patients in 2023.
Long said Hancock Health will continue to build upon the county’s growth while practicing efficiency, like being part of a national group purchasing organization called Ascension Health.
The hospital’s “best and most important resource is our people,” said Long.
“We take a look at, ‘Is everyone working at the top of their licenses? Are all the (providers) having as many patients coming through as we can? Are we ensuring we’re producing the best care?,’” he said
Hancock Health is also investing in patient navigation, “making sure people have an easy time getting in and finding an appointment and seeing their doctor. We are putting a lot of technology into that,” said Long.
“Generally we believe that if we provide the highest quality, most efficient care to our patients that we can, we will have even more patients coming here. In the end it always comes back down to growth … We will grow our way out of this (financial strain) while many other places cannot.”
