State Senate Minority Leader Len Fasano: Connecticut Needs Diversified Healthcare Options

Op-ed as it appeared in the New Haven Register
Connecticut’s health care market is rapidly changing. In recent months, failed negotiations between five Connecticut hospitals and Tenet Healthcare, an established national health care company, has brought even more attention to the growing problems we face.

Those who supported the planned acquisition by Tenet, including myself, have often been mischaracterized as favoring “for-profit” hospitals and the “deregulation” of health care. Neither is true. The crux of the Tenet issue is not a debate between for-profit vs. nonprofit or regulation vs. deregulation. Rather, it’s a debate about diversification and fairness — a debate that is key to understanding the shifting health care market in Connecticut.

Growing problems

Our health care system is undergoing historic changes. Hospitals, including “nonprofits,” are rapidly consolidating and buying up physician practices under the large umbrellas of just a few “health systems” such as Hartford Health Care and Yale New Haven Health System.

These large “nonprofit” health systems often engage in the very same anti-competitive and anti-consumer behavior traditionally associated with for-profit organizations. Over the last several years, for example, Yale New Haven Health System has aggressively bought up physician practices. It is now almost impossible to find independent physicians in certain practice areas, such as cardiology, orthopedics or oncology. I believe the same trend has been occurring in the Hartford market.

Yale, and other large health systems, use their expanded market power to drive up prices. They charge “facility fees” for services rendered at their owned physician practices. For example, patients may see the cost of an ultrasound double overnight simply because their doctor’s office was purchased by a hospital. They also use their increased market power to demand higher rates from insurers, employers and other payers, driving up the cost of health care for everybody and increasing consumers’ out-of-pocket costs. Other anti-competitive practices include referring patients to providers within their system so that more patients are seen and more services are provided at their higher-cost facilities. The cumulative effect of these practices is adding billions of dollars a year to the cost of health care nationally.

How these large “nonprofit” health systems invest the revenue generated from these anti-competitive practices is equally questionable. According to IRS filings, Yale, for example, pays its CEO close to $5 million a year and has at least 10 administrators making close to $1 million dollars or more. Some are clearly making a profit!

Tenet represented diversity, not deregulation

It is in Connecticut’s best interest to encourage diversity in its health care market. Tenet would have offered such diversity by acting as a counter balance to the growing market power of Hartford Health Care and Yale New Haven Health System. So would any out-of-state financially strong health care entity with a proven track record of successfully operating hospitals.

It was not Tenet specifically that I supported, nor was it the fact that Tenet happened to be for-profit. It was the opportunity to bring an experienced health care company into the state to provide resources, expertise and market diversity. When Tenet left, Connecticut lost an opportunity to welcome a new player and a viable competitor who could have helped offset the overwhelming growing power of in-state healthcare giants.

Fair regulations

To encourage diversification, the state needs to (1) do more to support those independent local nonprofit hospitals that continue to serve their communities, (2) provide consistent oversight of all hospitals alike and (3) ensure that hospital sale regulations apply equally to nonprofit and for-profit purchasers.

No purchaser should be given a “free pass.” However, our current regulatory framework discriminates against for-profits in a way that makes it virtually impossible for them to enter the market. Under current law, a for-profit could be burdened with vast regulations, just as the Office of Health Care Access proposed 47 broad, overbearing conditions on Tenet. Meanwhile, a nonprofit could buy up a hospital without the same regulatory oversight and lay off workers or cut services the next day.

This disconnect actually strengthens the already burgeoning market power of the few large in state health systems; which could likely result in higher costs and fewer choices of providers.

That’s why I have been working with Senate President Martin Looney and legislators from both sides of the aisle to develop policy initiatives to mitigate the anticompetitive effects of large health systems, support our remaining small and independent providers, increase price transparency for consumers, eliminate and cap facility fees, and create a level playing field for hospital sales.

To promote affordability, accessibility and choice, we have to work together to increase diversity in health care.

Senate Minority Leader Len Fasano represents the 34th District towns of Durham, East Haven, North Haven and Wallingford. For more information, visit www.senatorfasano.com.