OpEd: When Bad Data Tells the Wrong Story About Hospital Finances 

A recent analysis by the Employers’ Forum of Indiana suggests there is “no uniform narrative of financial distress” among Indiana hospitals. The implication is that hospitals may be overstating their challenges—and that warnings about service cuts or closures deserve skepticism. 

That conclusion may sound reassuring. Unfortunately, it is built on bad data and worse math. 

The Employers’ Forum analysis relies heavily on information funded by Arnold Ventures, a national organization with a well-known advocacy agenda aimed at limiting reimbursement and capping hospital prices. When an advocacy-driven analysis is presented incorrectly as being a neutral and unbiased picture of hospital finances, policymakers and the public should slow down and look carefully at what the numbers actually represent. 

A real world example from Jasper 

To see why this matters, consider Memorial Hospital and Health Care Center in Jasper—located in Gov. Mike Braun’s hometown. 

According to Memorial Jasper’s audited financial statements for 2023, the hospital posted an operating margin of -2.9%. Hospitals and their auditors are subject to the same laws as any other business in that they can be subject to civil and criminal fraud if these statements are filed incorrectly. In everyday terms, a negative operating margin means this hospital lost money doing what it exists to do: taking care of patients. Its costs to run the emergency room, staff hospital beds, pay nurses and physicians, buy medical supplies, and keep the building running exceeded what it brought in from patient care. 

Yet the Sage Transparency website, which draws on the same NASHP data cited by the Employers’ Forum, reports that Memorial Jasper had a 41% profit margin in that same year. 

Those two numbers cannot both be true at the same time in any meaningful sense. The difference isn’t efficiency or management. It’s Sage Transparency’s intentional mismatched and misleading accounting.  

What “operating margin” normally means 

For a household, a positive operating margin means your monthly take-home paycheck covers your bills. For a small business, it’s whether sales cover payroll, rent, utilities, and supplies. 

If a family earns $80,000 a year but spends $82,000 on mortgage payments, groceries, childcare, utilities, and gas, that family is not “profitable”—even if their retirement account happened to do well in the stock market that year. The same logic applies to hospitals. 

That’s why hospitals, banks, and credit rating agencies all use a standard definition of operating margin that compares patient-care revenue with all the expenses required to provide that care. Investment income is kept separate because you can’t pay nurses or keep an emergency department open with stock market projections or assets you can’t access on a moment’s notice. 

How the Employers’ Forum math breaks down 

The problem with the Employers’ Forum analysis is that it mixes and matches numbers that were never designed to go together. Specifically,  

• It counts nearly all revenue, including hospital revenue, revenue tied to physician clinics, and other services that are part of the hospital system as well as unpredictable investment income. 

• But it counts only a limited subset of hospital expenses, based on what Medicare considers “allowable” hospital costs. 

This approach comes from Medicare cost reports, which were never intended to show whether a hospital is financially healthy overall. These reports exist to determine how much Medicare will reimburse providers for specific services, not whether a hospital can keep its doors open. 

Using that method at Memorial Jasper actually excludes more than $100 million in real expenses in 2023 alone—while still conveniently counting all the revenue associated with those services. 

Sage Transparency’s excluded yet essential costs include physician compensation, clinic staff and overhead, other hospital based services, anesthesia staffing, and additional expenses that are necessary to run a hospital. To put that in context, that’s over $100 million in bills that any normal household or business would count when deciding whether they were solvent, but that Sage Transparency did not include when calculating their version of “profit margin.”

Imagine claiming your household budget is thriving because you counted your full paycheck but ignored your mortgage and grocery bills. It’s like counting both parents’ income while ignoring the cost of raising their children—numbers that look good on paper but don’t reflect what it actually takes to keep the household running. 

Why audited financials tell the real story 

Audited financial statements aren’t advocacy tools. They are independently reviewed and used by lenders, bond markets, and regulators to assess whether an organization can meet its obligations. 

When Memorial Jasper’s audited financial statement shows an operating loss, that’s what banks look at when deciding whether to finance equipment upgrades. It’s what hospital leaders look at when deciding whether they can afford to keep labor-intensive services like obstetrics or behavioral health open. 

No serious financial institution would lend money based on a calculation that drops tens of millions of dollars in real expenses. Yet that’s exactly the kind of calculation being used here to suggest hospitals are "extremely profitable.” 

Why this matters beyond the balance sheet 

Indiana’s hospital landscape is diverse. Some facilities are doing better than others, but portraying hospital warnings as overblown—based on distorted calculations—creates real risks. 

When flawed data shapes the conversation, it can divert attention from persistent pressures for all hospitals such as chronic Medicaid underpayment, rising expenses beyond hospital control, or the growing number of uninsured patients. The outcome won’t be theoretical. It will show up in closed and reduced services and longer drives for care—especially in rural communities. 

Hoosiers deserve honest math 

Hoosiers understand that you can’t judge financial health by pretending major expenses don’t exist. Hospitals shouldn’t be judged that way either. 

If the Employers’ Forum analysis were an accurate reflection of hospital finances, Gov. Mike Braun’s hometown hospital would still be independent today. It is not. Memorial Jasper’s margins were not sustainable on their own, and its transition to Deaconess Health System reflects that reality. Deaconess thankfully stepped in to provide the resources and stability needed to ensure Dubois County residents continue to have a hospital serving their community. 

That outcome deserves recognition—and it underscores the central point: honest math matters. When we misrepresent hospital finances, we don’t strengthen health care. We put access to care at risk.