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A Connecticut Yankee in Big Brother’s Hospital
Last week, Tenet Healthcare — a Dallas-based, for-profit company — withdrew its bids for five struggling Connecticut hospitals. It had been trying to work with regulators for two years on just the first of the purchases. But regulators in Connecticut’s Office of Health Care Access (OHCA) insisted on imposing 47 conditions on the acquired hospitals’ operations. The conditions, backed by hospital employee unions, included a five-year ban on reductions in staffing or consolidating services. As the company explained in a statement, “The extensive list of proposed conditions to be imposed on the Waterbury Hospital transaction… has led us to conclude that the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders.”
The deal’s collapse caught Democrats and regulators (and only Democrats and regulators) by surprise. “I expected people to talk,” said a forlorn (Democrat) Waterbury state legislator. Now, Waterbury Hospital faces the prospect of closure. The hospital has lost tens of millions of dollars each year recently, and projects similar losses for the foreseeable future. There is also a consensus that the hospital needs $50 million of capital improvements. “There is a point — and it’s very close — where there are no more options,” said the hospital’s CEO. Nearly 75% of the its patients rely on Medicare and Medicaid. Some state Democrats are now trying to spin the loss by saying the state has too many hospital beds anyway.
I was unfamiliar with the regulatory agency in question, the OHCA, so I looked it up. If I understand correctly, it has three primary functions: to collect data on hospital utilization and pricing; to serve as a sort of medical cost ombudsman for Connecticut residents; and to “oversee and coordinate health system planning for the state“.
That last one is a doozy. It gives the agency broad power, by requiring medical providers to obtain a “certificate of need” (CON) from the agency under the following circumstances:
(1) The establishment of a new health care facility;
(2) A transfer of ownership of a health care facility;
(3) The establishment of a free-standing emergency department;
(4) The termination by a short-term acute care general hospital or children’s hospital of inpatient and outpatient mental health and substance abuse services;
(5) The establishment of an outpatient surgical facility, as defined in section 19a-493b, or as established by a short-term acute care general hospital;
(6) The termination of an emergency department by a short-term acute care general hospital;
(7) The establishment of cardiac services, including inpatient and outpatient cardiac catheterization, interventional cardiology and cardiovascular surgery;
(8) The acquisition of computed tomography scanners, magnetic resonance imaging scanners, positron emission tomography scanners or positron emission tomography-computed tomography scanners, by any person, physician, provider, short-term acute care general hospital or children’s hospital;
(9) The acquisition of nonhospital based linear accelerators;
(10) An increase in the licensed bed capacity of a health care facility;
(11) The acquisition of equipment utilizing technology that has not previously been utilized in the state; and
(12) An increase of two or more operating rooms within any three-year period, commencing on and after October 1, 2010, by an outpatient surgical facility, as defined in section 19a-493b, or by a short-term acute care general hospital.
Some of these circumstances — particularly, the eleventh — are equally ambiguous and far-reaching. Our lawgivers have, therefore, graciously empowered the very same OHCA to determine whether or not a given change requires a CON (love that acronym) in the first place. It’s eye-opening to see not only which services OHCA grants or denies a CON, but also which services providers feel they need to ask for a determination on.
A few things jump out here. First, I was somewhat surprised to see that a CON is required not only to commence services, but to terminate them as well. Can they really force an organization to provide medical care?. Second, one would think that the Office of Health Care Access would be happy when an organization steps up to offer health care services, not treat them like an invasive species. Why should permission be required in order to expand access? Third, OHCA’s bureaucrats are charged with managing the precise number of hospital beds — not too many, not too few — in the state, as well as and the cardiac services and ORs and ERs. And third, what’s the deal with CT, MRI, and PET scanners?
I put this last question to a neighbor who routinely buys CT scanners (he’s a physics Ph.D. who conducts radiology research and teaches imaging physics to radiology students). He says that the law was passed 20 years ago, when the machines were just becoming practical for hospitals to own. At that time, legislators were concerned that hospitals and physicians would create a glut of imaging services, and then send patients for unnecessary tests in order to recoup their costs. Their fears never materialized, but the law remains on the books.
As if determining the scope of CONs wasn’t enough, the guidelines OHCA must use to evaluate them are are also set in law. Their considerations must take account of:
(1) Whether the proposed project is consistent with any applicable policies and standards adopted in regulations by the office;
(2) The relationship of the proposed project to the state-wide health care facilities and services plan;
(3) Whether there is a clear public need for the health care facility or services proposed by the applicant;
(4) Whether the applicant has satisfactorily demonstrated how the proposal will impact the financial strength of the health care system in the state;
(5) Whether the applicant has satisfactorily demonstrated how the proposal will improve quality, accessibility and cost effectiveness of health care delivery in the region;
(6) The applicant’s past and proposed provision of health care services to relevant patient populations and payer mix;
(7) Whether the applicant has satisfactorily identified the population to be served by the proposed project and satisfactorily demonstrated that the identified population has a need for the proposed services;
(8) The utilization of existing health care facilities and health care services in the service area of the applicant; and
(9) Whether the applicant has satisfactorily demonstrated that the proposed project shall not result in an unnecessary duplication of existing or approved health care services or facilities.
The law treats hospitals not as providers to patients, but as supplicants who are given the privilege of becoming a cog in the state’s health care system. The Democrats and regulators envision a world in which regulators keep that system running like a well-tuned engine, by giving them the power to limit access.
Yet somehow — despite the fine ministrations of regulators — Waterbury Hospital and four other facilities are in financial distress, and their failure threatens to reduce “access” for the proles.
This story has been told before. It’s a story of shortages, with sugar for the party bosses and saccharine for the rest. It’s a story in which many tools are used to keep the populace under control — perpetual wars, two-minute hates, rewriting history — but first and foremost, control of language. That story has a Ministry of Truth; this one, an Office of Health Care Access.
Tenet Healthcare knows how that story ends. Do Connecticut’s Democrats?
Published in General
The challenge is that some communities have more resources than others. So as soon as the concept of government intercession is conceded, it quickly leads to intervention at the state level in order to equalize outcomes. It’s viewed as inherently “unfair” that rich towns have good health services while poor cities have less “access”.
In fact, CT’s educational funding is a good example of this. Education is, in theory, a local matter and is funded with local taxes. In practice, high state taxes are used to channel funding from rich districts to poor districts, in the name of equality. So much of local education now depends on state money that local districts fight tooth and nail over the state’s funding formulas. On the flip side, the state uses its funding leverage to dictate policy goals. So I doubt this model would work any better with regard to medical care.
SoS, I agree completely.
I fear that many municipalities or counties which cannot support an urgent care facility through private revenues may also not have the public means to subsidize one through local taxes alone.
So inevitably, the municipality will turn to their state house to ask for some support. After enough municipalities have made such requests, the state government will find it necessary to set up some type of committee to evaluate whether these individual communities really need the services and funding they are requesting.
And voila….we’ve recreated the OHCA from scratch.
OK, I hadn’t known exactly what you meant by “regulation” – did you mean it in the specific sense of rules that everyone must comply with to even participate in the market or did you also mean government projects which aren’t direct regulation of the industry per se, but instead interfere by “competing” on tax-subsidized terms?
Is it a different line of reasoning? Yes and no. It’s possible to honestly believe that allowing markets to solve these problems all on their own is with very high probability the best course of action to take, while recognizing that many voters will never see it that way, and that their feelings in the matter count as much or more (since they are more numerous) than mine do, no matter how wrong they are.
Sorry, I probably should have used a term like “interference” or “intervention” instead of regulation.
Although it’s also assured that once the public starts funding medical institutions, regulation of those institutions (and possibly their competitors) will inevitably follow.
So does the Connecticut GOP have anything to say about all this?
There were some good quotes from GOPers in the articles, but even though they are saying the right things, there’s not much role for them beyond talking. We’ve got a Dem governor and Dems control both legislative chambers. The cities in question have Dem mayors. I think it’s more likely that we’ll get change when responsible Dems wake up to reality, rather than looking for the GOP to make inroads.
I worry about the same thing.
But how do market ideologues like me, who genuinely would welcome the chance to see what would happen if markets were simply allowed to do their thing, find a way to make a common cause with the seeming majority of people who find such ideology, presented without compromise or concession to their doubts, threatening and untrustworthy?
I’m no political tactician, but we have a very unfree healthcare system now. Getting from where we are to a freer system, even one that was far from perfect freedom, would be quite an achievement! If the most direct route to such an achievement involves a more conciliatory, empathetic tone toward the market-doubters, I hope that we’re not too proud to use it!
“. . .The deal’s collapse caught Democrats and regulators (and only Democrats and regulators) by surprise.”
“…it’s more likely that we’ll get change when responsible Dems wake up to reality, rather than looking for the GOP to make inroads.”
Thanks for Rico-splaining this news with in-state detail, SoS. Here’s hoping that Connecticut hospital regulators are soon to be having their No Grapefruit Day.
No Grapefruit Day is that on which the dictatorial class suddenly lacks an amenity because its victims have downed tools. In Atlas Shrugged, the President could be served no grapefruit one morning, because the last bridge over the Mississippi had fallen apart. This was terrible for him, and although it was not enough to make his head straighten out, it was enough for him to consider closer negotiations.
In the ObamaCuba threads, some make the case that Obama & Co. have pushed No Grapefruit Day to the indefinite future for the Castro family and the resort-owning Cuban military.
Anyway, I hope you will be able to update us as this saga continues. Appreciate it.
Ugh. Thanks for taking the time to answer my question.
The job losses begin: