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OP-ED | There’s Plenty of Hospital Money – It’s About Where They Spend It

by | Jun 29, 2015 8:00am () Comments | Commenting has expired | Share
Posted to: Opinion

If recent media reports on the impact of the state budget on our hospitals seem familiar, that’s because they are. As they did two years ago, the state’s big hospital conglomerates are crying wolf, even as they keep buying up the state’s health care system and driving up costs. The critical challenge we face is reining in the state’s growing hospital monopolies

Two years ago, Connecticut Hospital Association CEO Jennifer Jackson claimed the budget would cause “devastating cuts to hospital staffing, services, and programs,” with hospitals losing a total of $550 million over the biennium. Yale-New Haven Health Services Corporation (YNHSC) claimed it would lose $150 million, Hartford HealthCare $138 million. But the fact is that YNHSC generated $204 million in profits and Hartford $103 million last year – supposedly the year of the deepest cuts. That’s more profit in one year than the entire industry claims it will lose in the coming two years.

Some independent hospitals do need financial help, but the real issue is monopoly. While the state’s biggest hospitals bemoan the budget, regulatory records and financial statements show that they are spending millions of dollars for mergers and acquisitions, driving up costs and reducing patient choice.

Twenty years ago, Connecticut hospitals were all free-standing, independent non-profits. Today, most are either owned by large local systems that are “non-profit” in name only, or are selling themselves to national chains. Hospitals are also taking over doctors’ practices, sending prices soaring. Studies show that hospital mergers drive prices up between 20 percent and 50 percent, and that physician costs rise 30 percent when hospitals buy practices. Between them, Hartford and YNHSC own 9 hospitals, employ 738 doctors, and account for 48 percent of all hospital stays in the state.

And they’re still on the move:

• “Non-profit” Hartford HealthCare has applied to turn a gastroenterology surgery center into a for-profit subsidiary. Hartford plans to borrow $6.1 million for the deal, for the purpose of “enhancing alignment and integration,” which means taking greater control of G.I. patient referrals and money.

• Yale-New Haven has leased a floor at Milford Hospital, where it is moving its inpatient rehabilitation unit. At the same time, Milford has applied to close its Labor and Delivery service, because the doctors who used to deliver a majority of Milford’s babies “shifted their practice patterns to make YNHH their exclusive hospital provider.” With Yale-New Haven destroying Milford’s Labor and Delivery service and gaining a foothold in the building, can it be long before Milford becomes a Yale-New Haven satellite?

• Now, Yale-New Haven is in talks to take over Lawrence and Memorial Health System in New London. The deal has nothing to do with the state budget or financial distress. L&M’s finances are strong enough that they promised to make $36 million in capital investments when they bought Westerly Hospital in Rhode Island last year.

The important news in the legislature is the passage of SB 811, a bill to curb hospital monopoly. The bill makes hospitals disclose their top-secret prices, requires the state to publish up-to-date information on hospital quality, bans the outrageous facility fees that hospitals tack onto the cost of routine doctors’ office visits when they take over, eliminates the “surprise bills” patients get when an out of network doctor treats them at a network facility, and creates a statewide system to allow patients to direct their electronic medical records securely to any provider. With tough consumer protections, SB 811 will help us start gaining control over runaway health care costs.

SB 811 helps hospitals that really need it. Price transparency will allow independent hospitals to negotiate better rates once they can see what the big monopolies get, and the Connecticut Health and Education Facilities Authority is developing ways to get smaller hospitals access to bonding and other capital for things that patients actually need, like medical equipment.

Thanks to health care reform, 100,000 more people in Connecticut now have insurance to pay their hospital bills instead of needing charity care. Our big hospitals aren’t going broke. The question is what they are spending their money on, and what does it mean for people – for their care and their wallets.

Tom Swan is the executive director of the Connecticut Citizens Action Group.

DISCLAIMER: The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.

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(7) Archived Comments

posted by: amarko55 | June 29, 2015  12:59pm

Way to tell the truth Swanny!

posted by: oldtimer | June 29, 2015  3:24pm

Mr. Swan is misinformed. With the exception of a few hospitals, such as Yale, CT’s hospitals are in dire straits. Most are losing money, working with outdated equipment and operating with skeleton staffs. They’ve purchased doctor groups and clinics in hopes of expanding business and negotiating more favorable deals with insurance companies. Unfortunately, Obamacare has driven up operating costs and reduced reimbursements from Medicare and Medicaid. As things stand now, it’s all a formula for disaster.

posted by: JusticeCT | June 30, 2015  7:57am

Non-profit?  Why?  It’s not just Yale and Htfd that have huge profits: Danbury $51m, Stamford $40m, Norwalk $38m, St. Vincent’s $45m, Middlesex $36m, St. Mary’s $25m, St. Francis $16m, and the list goes on(fy2014 Revenue over Expenses—http://www.ct.gov/dph/lib/dph/ohca/hospitalfillings/2014/results_hospital_statement_of_ops_2014.pdf). 

And they pay their top 10 execs like giant for-profits:  Danbury $5.4m, Stamford $10.6m, Norwalk $6.5m, St. Vincent’s $6m, Middlesex $5.5m, St. Mary’s $3.8m, St. Francis $7.9m, and the list goes on.  St. Francis’s CEO made $3.1 million.  He may be doing a good job, but he is definitely doing very very well for himself. (http://www.ct.gov/dph/lib/dph/ohca/hospitalfillings/2014/top10_salary_2014.pdf).

We do have struggling hospitals, partly because of unfair contracts that pay them far less than the giants despite providing the same or better care.  We are allowing a hospital plutocracy to fester and grow—they leech more and more of our scarce health dollars every day and focus more on feathering their own beds and building empires than on patient care. 

They cry wolf, but are wolves in sheeps’ clothing. If they act like for-profits, they should be stripped of their non-profit status.

posted by: Bluecoat | June 30, 2015  9:10am

Just curious as to where supporters of the Not so affordable car act sit with the fact that massive fraud has taken place in the implementation of the state exchanges:
As reported only so far by Richard Pollock of the The Daily Caller:

“Taxpayer-funded Obamacare health insurance co-op’s may be running afoul of the law by giving extravagant paychecks to their top executives, according to a Daily Caller News Foundation investigation.

More than a million Americans have enrolled in the 23 non-profit Obamacare co-ops since they began in 2011.  The co-ops were intended to be consumer-operated non-profits focused on delivering healthcare to the working poor and others needing health insurance.

Read more

posted by: GBear423 | July 1, 2015  5:35am

GBear423

Creating a Law that mandates these Hospitals post the salaries and benefits of Hospital Adminstration and the profits of said Hospital in the medical billing area and in the multitude of bills they send out would be great for consumers to appreciate the perspective.
I do not think anyone should go without medical care, the best that we can provide, but this industry is bankrupting our States and now Federal government.

It was a mistake to pass the affordable care act at this time. The right thing to do would be to rein in the out of control costs of medicine First; and the only way to do that in this Country is cut the apron strings and allow it to compete in the free market, absent the crutch known as the US Tax Payer.

Kudos to the author here, he is right, the Hospitals have been digging their own hole, let them climb out.  Perhaps cut some of that executive pay, that would be a nice place to start.

posted by: oldtimer | July 1, 2015  11:54am

Justice… If hospitals don’t make profits, how are they supposed to purchase state of the art equipment? Or maintain the buildings? Or renovate? The hospitals that lose money year after year, what do you think they’re not able to do?

posted by: JusticeCT | July 1, 2015  3:34pm

@oldtimer, hospital profits are AFTER expenses—they are socking the extra cash away.  Proof is in the growth in assets. These 7 hospitals (and most) increased assets from 2010 to 2013, with several more than doubling over 3 years.  Total Assets for these 7 grew from $3.2B in 2010 to $4.4B in 2013—39%.  Net Assets grew from $1.4B to $2.0B—43%.  (source:  http://www.ct.gov/dph/cwp/view.asp?a=3902&q=554904,  Report 100, Lines 43 and 73—post an email address if you want the figures)
California stripped Blue Cross of its non-profit status last year due to its excess assets.  Just sayin.

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