Protecting Our Constituents in This Rapidly Changing Healthcare Environment

By Senator Marty Looney and Senator Len Fasano

The healthcare landscape is changing rapidly in our state and nation. A decade ago, Sharon Hospital, a small but vital community hospital serving rural Litchfield County, was struggling to keep its doors open. With none of our local non-profit hospitals offering to save it, the legislature allowed Sharon Hospital to be purchased by a for profit company. We were told at the time that this was a unique situation and that we would not see more of our non-profit hospitals seeking such buy outs.

Unfortunately, these reassurances proved to be optimistic, and Sharon Hospital proved to be a harbinger of things to come. Across the country and here in Connecticut smaller non-profit hospitals are struggling to survive in the modern health care market. Indeed, the number of for profit hospitals in the U.S. has increased by fifty percent in the last ten years.

Health care itself has changed from a largely labor intensive service to one that utilizes modern technology and equipment to diagnose and treat previously untreatable conditions. Investing in these resources requires access to capital that many small non-profits lack.

Relatively low reimbursement rates for Medicaid and Medicare require hospitals to compensate for lost revenue through other efficiencies such as bulk purchasing, centralized administration, and greater use of information technology.

In the face of these changes, it was clear to us that Connecticut needed to up-date its regulatory process. While many legislators were content to sit on the sidelines for fear of angering one interest group or another, to us, doing nothing was not an option. At best it would result in hospital takeovers by for-profits with no additional oversight and no statutory mechanism for future regulation by the General Assembly. At worst, it would result in years of tax payer financed litigation while one or more hospitals closed, causing hundreds to lose their jobs, and thousands to lose access to their doctors and to effective care. We worked with all of the interested constituencies, including the local hospitals, Yale, Tenet, labor organizations, the Governor’s office and others to craft what we believe is a balanced first step in an ongoing process.

Our top priority in creating this new regulatory framework is to protect the quality of patient care. Patient choice, employee rights, physician autonomy, and regulating market share were also high priorities.

The legislation increases mandated reporting of any transaction a hospital makes to acquire a doctors group and subjects larger transactions to the Certificate of Need (CON) process including:

• Mergers or affiliations between physician practices that lead to a group with eight or more doctors, or between physicians and a hospital, will now be reported to the Attorney General;
• Medical foundations will be required to provide detailed reporting of their finances;
• Hospitals will have to report annually to the Attorney General and Department of Public Health on the group practices they own or have an affiliation with;
• Medical practices with 30 or more doctors that aren’t affiliated with hospitals would have to submit annual reports to the attorney general and health department.

The Attorney General will get notice of pending mergers or acquisitions involving hospitals or other health care providers that involve assets large enough to require notifying the Federal Trade Commission or the U.S. Department of Justice as part of antitrust law.

The criteria used in the CON process are also expanded under the bill to include the impact on the diversity of health care providers and patient choice. In addition, under the new legislation, the commissioner of the Department of Public Health shall deny any application unless he or she finds that the affected community will be assured of continued access to high quality and affordable health care after accounting for any proposed change impacting hospital staffing.

A good doctor patient relationship is the key to quality care. This legislation requires that hospitals inform patients that they have the right to have their own doctor informed of their hospitalization.

The legislation increases the oversight of medical foundations which are used to employ hospital and health system staff. The new law creates a wall between for-profit and non-profit medical foundations such that no representative of one may serve on the board of the other and allows each hospital, health system, and medical school to create only one foundation per entity. All medical foundations will be required to provide detailed financial information to the Department of Healthcare Access which is required under the legislation to post this information.

The bill also requires that the Commissioner of the Department of Public Health and the Attorney General hold a public hearing regarding the sale of a hospital in the municipality where the hospital is located. It grants the Attorney General and the Commissioner the power to place additional terms and conditions on the approval of the application.

We believe that this legislation is just the beginning; hospital regulation is a complicated and moving target. We will be closely observing Tenet, Yale and anyone else who seeks to operate hospitals in Connecticut. We will be the first to propose additional action if the interests of patients, employees, doctors or others are being ignored. We are from different political parties, but protecting our constituents in this rapidly changing healthcare field is not a partisan issue for us.