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?

There are 40 comments.

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  1. Matede Inactive
    Matede
    @MateDe

    Hey thanks Egon Jr, I was just getting out of my re-election of Malloy funk, then I read this.

    I guess things have to get REALLY bad before this state wises up.

    • #1
  2. Jimmy Carter Member
    Jimmy Carter
    @JimmyCarter

    There’s a lot to digest, but I just want to state that is a brilliant title/headline.

    • #2
  3. blank generation member Inactive
    blank generation member
    @blankgenerationmember

    If I’m reading correctly if all four hospitals close where would the 75% on Medicare/Medicade go?  I figure the balance are on private insurance and would find a provider.  Ship ’em to New York?

    • #3
  4. Tuck Inactive
    Tuck
    @Tuck

    Blue State = Idiocracy.

    • #4
  5. MarciN Member
    MarciN
    @MarciN

    Could this be a play on the part of Tenet? Pretending to walk away?

    • #5
  6. Full Size Tabby Member
    Full Size Tabby
    @FullSizeTabby

    Many areas have these oversight boards (local regulators) for medical facilities. I am still waiting for the evidence that these regulators know more about what will and will not serve the needs of an area than do the people whose livelihoods depend on serving the needs of the area.

    • #6
  7. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    blank generation member:If I’m reading correctly if all four hospitals close where would the 75% on Medicare/Medicade go? I figure the balance are on private insurance and would find a provider. Ship ‘em to New York?

    Just to be clear, 3 of the other 4 proposed acquisitions were in other towns.

    WRT Waterbury, the town has two hospitals: Waterbury Hospital (historically Protestant) and St. Mary’s (Catholic). Tenet’s strategy was to buy both struggling hospitals and make a single, viable hospital system by eliminating today’s costly duplication in services. However, regulators — beholden to labor unions — insisted as a condition of approval that no jobs or services could be canceled for 5 years. This eliminated any benefits of the acquisitions. So what happened as a result? Waterbury Hospital will close, St. Mary’s will remain as the lone hospital. Jobs will be lost and services cancelled. There will be a single system with no duplication. It’s hard to see what the regulators achieved, beyond chasing investors out of the state and consigning other CT towns to losing their hospitals.

    • #7
  8. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    Jimmy Carter: There’s a lot to digest

    Apologies, I probably should have let this percolate a little longer — I’m sure some editing would have made it more readable and concise. But this situation makes me so mad, I just had to get it off my chest.

    • #8
  9. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    MarciN:Could this be a play on the part of Tenet? Pretending to walk away?

    I think that’s unlikely at this stage. By all indications, Tenet is done with the state, for good.

    • #9
  10. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    Full Size Tabby:Many areas have these oversight boards (local regulators) for medical facilities. I am still waiting for the evidence that these regulators know more about what will and will not serve the needs of an area than do the people whose livelihoods depend on serving the needs of the area.

    The locals — including Waterbury’s mayor — supported Tenet. It was the centralized state bureaucracy, and their union allies, who claimed to know better.

    • #10
  11. user_385039 Inactive
    user_385039
    @donaldtodd

    So the progressives who live in Fairyland were caught by surprise when the tickets to their bailiwick cost too much.  Overreach in the medical areas seems to be a Democrat problem at many levels.

    And the unions were involved in the decisions.  Not surprising at all.

    • #11
  12. user_252181 Moderator
    user_252181
    @AlFrench

    Oregon also requires a certificate of need for health care facilities. I suspect that the feds have a hand in this.  Any health care experts out there know?

    • #12
  13. Tom Meyer Contributor
    Tom Meyer
    @tommeyer

    Son of Spengler: The law treats hospitals not as providers to patients, but as supplicants who are given the privilege of becoming a cog in the 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.

    And to think that the Cubans normalized relations with these people.

    • #13
  14. bagodonuts Member
    bagodonuts
    @bagodonuts

    Thanks for this, SoS. Cato has some good stuff on the history of CON (like many bad things, it’s a 60’s/70’s innovation):

    • #14
  15. Western Chauvinist Member
    Western Chauvinist
    @WesternChauvinist

    You gotta hate that impulse for central planning. Central planning kills.

    • #15
  16. Vance Richards Member
    Vance Richards
    @VanceRichards

    And look who is on Tenet’s Board of Directors . . .

    • #16
  17. Son of Spengler Contributor
    Son of Spengler
    @SonofSpengler

    bagodonuts:Thanks for this, SoS. Cato has some good stuff on the history of CON (like many bad things, it’s a 60′s/70′s innovation):

    Thanks for the link. That’s very informative. The federal government and other states learned their lesson; CT remains backwards.

    The more I think about it, what bothers me most about the whole situation is the idea that bureaucrats presume to know what consumers “need” better than they and the providers do. On many levels. If my town only “needs” one pizzeria, but they make lousy pizza, a new pizzeria can open and put them out of business. Consumers win because they get better pizza. But according to the logic of CON, any hospital is just as good as any other.

    (I also just noticed the irony that OHCA’s rationale is in direct opposition to their stated mandate, however misguided that mandate may be. They are supposed to avoid “duplication of… services”, which is what Tenet is proposing to do. But OHCA is actually working to preserve that duplication.)

    • #17
  18. user_428379 Thatcher
    user_428379
    @AlSparks

    The medical establishment has a history of limiting services going back to at least the mid 20th century.  That includes limiting the number of medical schools so the smaller number of doctors would inflate their price.

    There was a time when doctors would make house calls.  These doctors, called general practitioners, were plentiful.

    If you ever want to get a feel of what this was like, watch the first season of Marcus Welby, MD, first aired in 1969.  During that time period, GP’s were already an endangered species, and a couple of the episodes cover that, though they didn’t cover the fundamental reason for the then looming shortage.

    • #18
  19. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Son of Spengler: 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“.

    Apparently, “The Office of the Healthcare Advocate (OHA) was created in 1999 by the Connecticut State General Assembly by passage of Public Act 99-284 ‘An Act Concerning Managed Care Accountability’.”

    A sobering reminder of how unfree our healthcare system was before Obamacare.

    • #19
  20. Mendel Inactive
    Mendel
    @Mendel

    Midget Faded Rattlesnake:

    A sobering reminder of how unfree our healthcare system was before Obamacare.

    This.

    Anytime someone – whether or left or right – repeats the stupid claim that America had a free-market health care system prior to the PPACA, I will direct them to this thread.

    • #20
  21. Vance Richards Member
    Vance Richards
    @VanceRichards

    Mendel:

    Midget Faded Rattlesnake:

    A sobering reminder of how unfree our healthcare system was before Obamacare.

    This.

    Anytime someone – whether or left or right – repeats the stupid claim that America had a free-market health care system prior to the PPACA, I will direct them to this thread.

    I have heard Obamacare supporters say, “Well, something had to be done” and act like it is the markets fault. As you point out, the real issue is way too many regulations, and adding thousands of new regulations won’t solve that problem.

    • #21
  22. user_278007 Inactive
    user_278007
    @RichardFulmer

    One of the Left’s comebacks to the suggestion that a proposed regulation could shut down business is: “I thought you folks on the right believed in the market system!  Where is your faith in the market’s ability to overcome obstacles?”

    The answer, of course, is that we on the right believe in *free* markets.  Keep throwing regulations at a market, though, and at some point it’s no longer free.  And, yes, businessmen do strive to deal with regulations, but often the solutions they find result in some very undesirable consequences.

    • #22
  23. Mendel Inactive
    Mendel
    @Mendel

    As fun as it is to dump on the absurdities of overregulation when their consequences become all to real, we should also figure out how to address the underlying reason that agencies such as the OHCA exist.

    At bottom, there is a fear that allowing hospitals to open, close, expand and contract at will may leave certain populations without coverage, either temporarily or permanently. And there is some justification to this fear: while the free market provides most people most of what they want most of the time, it doesn’t give 100% of the people 100% of what they want 100% of the time. Grocery stores open and close, airlines pull out of certain cities, and broadband providers don’t upgrade connections to some areas.  Not a big deal in those cases, potentially life-and-death when it comes to emergency rooms.

    So is our argument “no regulation of when hospitals can open and close,” or “better regulation of when hospitals can open and close”? Which is based on an even thornier question: are we willing to accept that free market-based healthcare will occassionally lead to natural gaps in the provision of “required” care?

    • #23
  24. Z in MT Member
    Z in MT
    @ZinMT

    Mendel:

    Midget Faded Rattlesnake:

    A sobering reminder of how unfree our healthcare system was before Obamacare.

    This.

    Anytime someone – whether or left or right – repeats the stupid claim that America had a free-market health care system prior to the PPACA, I will direct them to this thread.

    True,

    However, at least before Obamacare more of this was confined to state regulation which could be gotten around by going to another state for healthcare.

    Which is what I think will begin happening now, only internationally.  Look for a major health provider to start building hospitals in the Caribbean and offering to their patients much lower co-pays to have major operations and treatments performed there (including free round-trip plane tickets).

    • #24
  25. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Mendel:As fun as it is to dump on the absurdities of overregulation when their consequences become all to real, we should also figure out how to address the underlying reason that agencies such as the OHCA exist.

    At bottom, there is a fear that allowing hospitals to open, close, expand and contract at will may leave certain populations without coverage,

    Although not allowing them to open and close at will risks leaving people without coverage, too. In my heavily-regulated state, finding adequate healthcare (or any healthcare for certain common problems) in your area may be impossible.

    Even when, say, an “adequate” hospital is nearby, some people prefer being driven to another hospital, if possible. (My parents, for example. They believe they get better emergency care at the hospital two towns over.)

    And there is some justification to this fear: while the free market provides most people most of what they want most of the time, it doesn’t give 100% of the people 100% of what they want 100% of the time. Grocery stores open and close… Not a big deal in those cases, potentially life-and-death when it comes to emergency rooms.

    On the other hand, most of us most of the time would die sooner without food than without medical care. Yet a largely unregulated market in food has left even the poor fat.

    So is our argument “no regulation of when hospitals can open and close,” or “better regulation of when hospitals can open and close”?

    To say the answer is “better regulation” presupposes that regulating when hospitals can open and close is the best way of overcoming local unavailability of care that the market has somehow not addressed. This means an entire industry has to play “Mother may I?” in order to exist. Why are such blanket regulations preferable to say, municipalities occasionally voting to fund a local clinic or hospital with taxpayer dollars, in much the same way municipalities fund other amenities, like food banks, parks, and swimming pools?

    Which is based on an even thornier question: are we willing to accept that free market-based healthcare will occassionally lead to natural gaps in the provision of “required” care?

    If there’s a high likelihood that the gaps in “required” care will be as great or larger in a heavily-regulated market, why wouldn’t we prefer the relatively smaller free-market gaps?

    Do markets sometimes fail? Of course. But do they fail better or worse than the alternative?

    • #25
  26. user_129539 Member
    user_129539
    @BrianClendinen

    However, most states in the union require state approval for building and expanding hospitals including my state Florida. Although it appears OHCA  have a lot more power than their equivalent institutions in other states.  And the general public and politicians wonders why Health care cost so much.

    Also can I just say how much I enjoy reading an in-depth  post about state level politics, especially when the state is not California or New York. I think we get way to hung up on national politics here and we don’t get into enough about local for a site that is primary about politics.

    • #26
  27. Tuck Inactive
    Tuck
    @Tuck

    Midget Faded Rattlesnake: Yet a largely unregulated market in food has left even the poor fat.

    The food business is hardly “largely unregulated”.  It’s about as unregulated as the medical business is.  The fat poor people are evidence of that.

    Everything I Want To Do Is Illegal: War Stories from the Local Food Front

    • #27
  28. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Tuck:

    Midget Faded Rattlesnake: Yet a largely unregulated market in food has left even the poor fat.

    The food business is hardly “largely unregulated”…

    ““Everything I Want To Do Is Illegal: War Stories from the Local Food Front

    Fair enough.

    Even so, I don’t think you need to show “proof of need” in order to open a food business, or proof of superfluity (if that’s the way to put it) in order to shut one down. And for all the regulations food faces, it’s still a market where price functions much better than in medical care. To find healthcare suppliers willing to tell you what a procedure or prescriptions costs is the exception, not the norm, in the medical world. I at least know what the cheese I buy costs even if it isn’t made with raw milk. So it seems to me that one is orders of magnitude less free than the other.

    • #28
  29. Mendel Inactive
    Mendel
    @Mendel

    Midget Faded Rattlesnake:

    Mendel:

    Although not allowing them to open and close at will risks leaving people without coverage, too. In my heavily-regulated state, finding adequate healthcare (or any healthcare for certain common problems) in your area may be impossible.

    If there’s a high likelihood that the gaps in “required” care will be as great or larger in a heavily-regulated market, why wouldn’t we prefer the relatively smaller free-market gaps?

    I agree that there will be fewer gaps in coverage under a free-market system.

    However, the underlying attitude makes a big difference when trying to convince the public to support any reform. The sentiment at the heart of laissez-faire is non-intervention: if the only hospital serving a region closes, we should not intervene as a body politic, but should wait until the market finds a new solution.

    Meanwhile, the conceit underlying all regulation is “Problem? We can fix that.” Never mind that it is often untrue – just the notion that we have empowered ourselves to fix problems gives people a great deal of certainty.

    So what argument do we present to the public? “Yes, there will be gaps in coverage. They will likely be very few and far between, but when they occur, we must wait until the market corrects them.”  Or “Gaps may occur, but when they do, we’re all over it.” I’m not saying I prefer the latter (I don’t), but that it is likely in line with the gut instinct of a majority of Americans, no matter how they may respond to polls.

    • #29
  30. Mendel Inactive
    Mendel
    @Mendel

    Midget Faded Rattlesnake:

    Why are such blanket regulations preferable to say, municipalities occasionally voting to fund a local clinic or hospital with taxpayer dollars, in much the same way municipalities fund other amenities, like food banks, parks, and swimming pools?

    But this is exactly what I meant by “better regulation of healthcare” (as opposed to “no regulation of healthcare”).

    This type of proposal embraces the notion that some form of socialized medicine is acceptable, as long as the socialization occurs at the local level – which is much different from the notion (which is usually heard from the right) that all state interference in medicine is detrimental. In other words, we’re not opposed to taking big public interventions into healthcare (like public subsidizing of hospitals), we just think a different body (the municipality) should be the one doing the intervening.

    That is a much different line of reasoning than the one which says the market can solve problems by itself. I am simply asking: do we think the health care market can function on its own, or do we see the need for some degree of intervention to prevent outcomes we would consider unacceptable?

    And if it is the latter – if we don’t think the market can do everything we want it to – where do we see its limitations?

    • #30

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