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