Indiana Hospital Association (IHA) President Scott Tittle’s recent op-ed attempts to create confusion around data, distorts the Employers’ Forum of Indiana’s (EFI) analysis, and relies on the IHA’s strategy of cherry-picking rural hospital examples while shielding the major hospital systems that have been the focus of policies at the statehouse.
The IHA misrepresents EFI’s position by asserting that our analysis accuses hospitals of overstating their financial challenges, but EFI made no such claim. Our analysis found that Indiana’s hospital market is bifurcated, with some hospitals clearly struggling and others extremely profitable, resulting in significant variation in financial performance across the state. That finding aligns with national research, including the RAND 5.1 hospital price transparency study. RAND 5.1 further shows that Indiana has the ninth highest hospital costs in the nation and that Hoosiers with employer-sponsored insurance pay approximately 300% of what Medicare would pay for the same services.
Recognizing that variation in financial performance is not skepticism of hospital distress; rather, it is necessary to protect access to care where it is most at risk while appropriately accounting for the financial capacity of the state’s most profitable hospitals.
The IHA-commissioned study relied on an eight-month snapshot of 53 undisclosed hospitals. EFI’s analysis, by contrast, included a full year of data from the state’s 114 general acute care hospitals using Medicare Cost Reports prepared, signed, and submitted to Medicare by hospital executives.
EFI accessed the data through the Hospital Cost Tool, a publicly available data source managed by the National Academy for State Health Policy (NASHP), which sources the data directly from the CMS-hosted database called HCRIS. Moreover, EFI published both its analysis and the underlying data sources so the findings could be reviewed, evaluated, and replicated.
EFI used this data in its analysis for several reasons:
- It contains 14 years of financial information covering over 4,000 individual acute care hospitals in all 50 states in one database.
- The information is in a common format with consistent definitions.
- It covers hospital operations, which constitute the core of our health systems.
- Audited financial statements are generally not available for all hospitals at the individual hospital level, report formats vary among hospitals, and these reports are not available in a searchable database.
Medicare Cost Reports do not include the revenue and expenses of hospital subsidiaries, such as affiliated medical groups or real estate ventures, because they are designed to measure the financial performance of hospital operations. That focus is intentional. For purposes of informing public policy, the relevant question is whether hospitals themselves have the overall financial capacity to sustain operations.
Over time, hospital systems have expanded into a wide range of non-hospital enterprises, and hospitals may subsidize some of those activities, including affiliated medical groups. As a result, the financial information reported in Medicare Cost Reports and in system-level audited financial statements may differ. Those differences do not indicate flawed data but reflect different scopes and different questions being asked.
The subsidy of physician groups is itself a recognized issue. As documented in the RAND hospital price transparency studies, hospitals in Indiana are paid consistently above the national average, while physician groups are paid below the national average, contributing to consolidation and higher overall prices. That dynamic underscores, rather than undermines, the importance of separating hospital operations from broader system finances when assessing financial capacity and shaping targeted public policy responses.
EFI shares IHA’s concerns regarding the financial distress of several of Indiana’s hospitals. Moving forward, we invite the IHA to consider innovative strategies for hospitals and employers to work directly together to support the vital role that businesses and hospitals play in creating healthier communities.