Indiana’s largest nonprofit hospital systems will face limits on how much they can charge for care under legislation headed to the governor. The hospital systems would have to meet certain requirements by 2029 — or forfeit their nonprofit status.
House Enrolled Act 1004 requires the Office of Budget and Management to conduct a study to determine average hospital prices. Indiana’s largest nonprofit hospital systems then have to set prices equal to or less than the statewide average. The legislation targets Indiana’s “big five” nonprofit systems: Indiana University Health, Parkview Health, Franciscan Health, Community Health Network and Ascension Health.
Lawmakers said those hospitals can choose to lower prices or transition to a for-profit model.
Sen. Tyler Johnson (R-Leo) said the bill doesn’t explain what happens when a system fails to adhere to the price limits and loses its nonprofit status.
“We can say we are never going to get there, because they'll either become for profit or go underneath it, but that's not the bill we're passing,” Johnson said. “What happens when you violate them?”
If hospitals don’t comply, they lose their non-profit status for at least one year. But Rep. Martin Carbaugh (R-Fort Wayne), the bill’s author, said they can regain their nonprofit status by maintaining compliance with the policy for a length of time determined by OBM.
Johnson said nonprofit hospitals are licensed under a nonprofit corporation. He and other opponents said the idea of letting go of a nonprofit status and switching to a for-profit system doesn’t work.
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Sen. Liz Brown (R-Fort Wayne) said hospital licenses are tied to their status as a nonprofit.
“The day they lose their not-for-profit status, their license currently is contingent upon that, so they have to close their doors,” Brown said.
Brown said the best-case scenario is that the hospital system knows it’ll lose its status and has the ability to switch to a for-profit model. She said this can leave systems with two options: sell or shut down. Either way, Brown said the community loses access to vital services.
Even if the nonprofit system chooses to sell, Brown said it isn’t likely that a buyer is going to buy everything within that system because nonprofit systems tend to maintain services that result in lost revenue.
“Just like any institution or corporation merger, they're not going to have to buy all the assets,” Brown said. “It's going to be a fire sale. [For-profit buyers] are not going to buy the hospitals that are losing money. That's what not-for-profit systems do, they bolster them up and keep them open, because that's a community benefit. That's part of their charity care.”
Brown said rural communities will suffer the most if nonprofit hospitals choose to shift or have to shift to a for-profit model. She also said she’s concerned that the 2029 deadline is not enough time.
Abigail is our health reporter. Contact them at aruhman@wboi.org.
