State: No loan until Methodist Hospitals in Gary parts with sea of red

INDIANAPOLIS - Methodist Hospitals has to show that its Gary location can turn a profit before the state would consider a bailout of any size, Indiana Family and Social Services Administration Secretary Mitch Roob said Thursday.

"The ball's really in their court," he said.

A day earlier, state Rep. Charlie Brown, D-Gary, said the financially troubled hospital could rebound with a $25 million loan from the state. That would represent a partial advance on $67.5 million in state funds the hospital normally would not see until next year.

Methodist Northlake, Gary's only hospital, has been losing about $2 million a month. Roob says that no state loan, no matter the size, can be considered until Methodist can show state and local officials a business plan that will keep the Gary hospital out of the red.

"In many respects, it's an all or nothing deal," Roob said. "They've got to come up with a sustainable business. model."

In the meantime, Methodist Hospitals has been talking with Clarian Health Partner, which operates an Indianapolis hospital heavily focused on providing care to poor, uninsured patients. Hospital officials have not said how those talks might affect the future of Gary Methodist.

Rep. Brown, meanwhile, has joined local officials, who promise to launch a lawsuit if Methodist tries to curtail services at its Gary location. They point to a 1979 federal court decree that requires the hospital to provide the same level of service at its Northlake Campus in Gary and its Southlake site in Merrillville.

Roob was in Valparaiso Thursday to meet with state workers whose jobs could be affected by a plan to privatize the administration of state welfare services and health care for the poor.

Roob says his agency has received two bids for a contract that could be worth $1 billion over 10 years. The state expects to complete a deal by July.

The contract could affect more than 2,000 state employees. Roob said he and state Rep. Mary Kay Budak, R-LaPorte, met with some of those employees to "allay fears" and assure them that they will be offered comparable jobs with similar pay and benefits with the private firm or elsewhere in state government.

Roob says the state needs outside help after an internal audit recently showed a 26 percent eligibility error rate for programs administered by his agency.

"We can do better than that," he said. "But not inside the current system."