Legislature(2001 - 2002)
02/20/2002 01:35 PM Senate HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
February 20, 2002
1:35 p.m.
MEMBERS PRESENT
Senator Lyda Green, Chair
Senator Loren Leman, Vice Chair
Senator Gary Wilken
Senator Jerry Ward
Senator Bettye Davis
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 250
"An Act extending the dates for assignment of performance
designations of public schools and the dates for reports and
monitoring based on those designations; and providing for an
effective date."
MOVED CSSB 250(HES) OUT OF COMMITTEE
SENATE BILL NO. 256
"An Act relating to the certificate of need program; and
providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 250 - See HESS minutes dated 1/30/02 and 2/11/02.
SB 256 - See HESS minutes dated 2/4/02 and 2/13/02.
WITNESS REGISTER
Mark Leal
Director of Assessment
Department of Education &
Early Development
th
801 W 10 St.
Juneau, AK 99801-1894
POSITION STATEMENT: Answered questions regarding SB 250
Jerome Selby
Providence Health System of Alaska
Anchorage, AK
POSITION STATEMENT: Supports SB 256
Dr. Chandler
No address provided
Anchorage, AK
POSITION STATEMENT: Discussed problems he has encountered with
the CON program - supports competition in the health care
marketplace
Charles Franz
South Peninsula Hospital
4300 Bartlett St.
Homer, AK
POSITION STATEMENT: Supports continuation of the CON program
Kim Pickerel
Health South
No address provided
POSITION STATEMENT: Supports SB 256
Kathy Cronen
CEO, North Star Behavioral Health Care
Anchorage, AK
POSITION STATEMENT: Supports SB 256
ACTION NARRATIVE
TAPE 02-10, SIDE A
Number 001
CHAIRWOMAN LYDA GREEN called the Senate Health, Education &
Social Services Committee meeting to order at 1:35 p.m. Present
were Senators Leman, Wilken, Davis and Green. Chairwoman Green
announced the committee would first take up SB 250 and that the
Department of Education and Early Development (DOEED) sent
committee members a written response to a request for information
made by Senator Wilken at a previous meeting.
SB 250-SCHOOL PERFORMANCE REPORTS
MR. MARK LEAL, Director of Assessment at DOEED, informed
committee members that the school report card has been a dynamic
document over the years. In the late '80s and early '90s, the
report card focused on providing information about each school
district in a fairly detailed format. In the mid to late '90s,
the focus shifted to reporting statewide information; district
information was included in a table in an appendix. Beginning
with the 99-00 report card, the focus was on reporting school-by-
school information. District information was provided in a table
in the back of the report card.
When DOEED started to look at reporting information on a school-
by-school basis, a few unique challenges arose. First, the small
size of many of Alaska's schools made it difficult to report
information without violating a requirement to not release
personally identifiable information under the federal Family
Education Rights and Privacy Act (FERPA). Second, when DOEED
looked at publishing the report in a paper format, as it had in
the past, the document had grown from 25 pages to 520 pages.
Because of high printing costs, DOEED decided to post the report
cards on its website and publish the last two years' report cards
on CDs at the end of March. DOEED is also changing the web
version of the school report card to be more user-friendly by
organizing the schools into districts rather than alphabetically.
In addition, the format will have a district-by-district file.
MR. LEAL said he is currently reviewing the school report card to
identify areas that need to be improved to meet the intent of
statute and provide the public with useful information. Alaska
statute requires that district goal reports be collected and
summarized by DOEED. That information fell by the wayside when
DOEED moved to district spreadsheet profiles. In addition, the
new federal Elementary and Secondary Education Act (ESEA)
contains a variety of public reporting requirements.
MR. LEAL distributed a document he prepared for the committee
entitled "Report Card to the Public," which contains current
Alaska law, items currently reported by DOEED, and additional
reporting requirements that must be incorporated into the
existing report card. He noted that DOEED is figuring out how to
manage this data at the department level because it is required
to compile and warehouse data and verify its accuracy.
CHAIRWOMAN GREEN asked Senator Wilken if his concerns have been
satisfied by the information provided.
1:43 p.m.
SENATOR WILKEN said he had a few more questions, the first being
where DOEED is headed regarding comparability and whether the new
report will contain a chart that compares districts, similar to
one on the web last year.
MR. LEAL said it will contain a similar chart. DOEED is in the
process of formatting it to put on the web.
SENATOR WILKEN indicated that DOEED used to publish the dollar
expenditure per student each year. He said he would like to
amend SB 250 to require that amount be reported and categorized
by "total, federal, state, local and other" per student.
CHAIRWOMAN GREEN asked Senator Wilken about a start date for that
requirement.
SENATOR WILKEN replied:
I would say next year but our office is certainly
capable of publishing that for the '01 audited
information and we could probably do '02 now that it's
all set up. I guess I'll defer to the department
whenever they'd be comfortable to do it. I don't think
it's a big project.
SENATOR WILKEN then moved to insert on page 2, line 4, a new
paragraph (4) that reads, conceptually, that dollars per student
expenditures be reported and categorized by total, federal,
state, local, and other (Amendment 1).
SENATOR WILKEN then moved to amend Amendment 1 to change the word
"expenditures" to "revenues."
CHAIRWOMAN GREEN announced that with no objection, the amended
amendment was adopted.
SENATOR WILKEN said his concern last week was that over the
years, the report has changed from a detailed one to a very
rudimentary one. He said he now feels comfortable that DOEED is
creating a usable report that allows comparability and that it is
something an interested parent can understand.
SENATOR WILKEN said he had a good discussion with Mr. Leal about
federal reporting requirements for schools with fewer than 10
students. It is his understanding that the number 10 was passed
on to DOEED through the federal government, but that the state
may eventually decide that 5 or 15 students should be the limit.
DOEED is trying to avoid problems with FERPA but is looking at
reducing that number to 5.
MR. LEAL said that number came from guidance from the federal
government, DOEED's testing contractor, and from information
based on what other states are doing.
2:50 p.m.
SENATOR DAVIS said she has no problem with the request of
information from DOEED, but she does not understand why it should
be included in this bill as it is about school designators, not
school report cards. She asked if Amendment 1 will require a
title change.
SENATOR WILKEN said the way he reads it, it all falls under AS
14.03.120, which this bill addresses. Language in .120(f) says,
"The report must include" and the bill lists items that must be
included. Amendment 1 adds another item that is not in statute
today.
SENATOR DAVIS stated that all items required to be in the school
report card are not listed in the statute.
SENATOR WILKEN said the intent of the motion was to make sure
that dollars per student are in the report card. Today they are
not.
With no further questions or testimony, SENATOR WILKEN moved CSSB
250(HES) from committee with individual recommendations and its
attached fiscal note.
SENATOR DAVIS asked if Amendment 1 will change the fiscal note.
CHAIRWOMAN GREEN said the bill has a zero fiscal note and that it
has a referral to the Senate Finance Committee, where the fiscal
note can be addressed. She then announced that without objection,
CSSB 250(HES) will move to the next committee of referral.
SB 256-CERTIFICATE OF NEED PROGRAM
CHAIRWOMAN GREEN explained that in talking to various people, she
is looking at legislation that will include some language similar
to what the Alaska Hospital and Nursing Home Association has
provided to change the parameters and to change how the
Certificate of Need (CON) program is implemented. She has
requested that a proposed committee substitute (CS) be drafted
but it will not be ready until Friday. That CS has to do with the
Coghill plan for the regional programs but requires a CON for all
psychiatric and long term care beds, and it will change the
threshold to $2 or $3 million, a figure close to the CPI
adjustment. She said that people who want to testify can address
their comments to the proposed CS or the CON program in general.
She commented that this issue is a very difficult one. She is
trying to figure out how to improve a system that for some is the
best thing that ever happened while for others creates a great
disincentive to improvement.
1:58 p.m.
MR. JEROME SELBY, Providence Health Systems of Alaska, said that
overall, the CON program provides a good service to the people of
Alaska because it puts the state in a position to oversee and
monitor what is happening with health care delivery in Alaska.
For those in the health care business, submitting a CON
application can be a bit of a nuisance to deal with, but
Providence Health Systems believes the greater good is served by
having a CON program. It assures that Alaskans get good quality
of care by meeting their needs in terms of access to care without
overbuilding and paying extra money for unnecessary facilities.
Providence wrote off $14 million in charity care and $14 million
in bad debt last year, and it is writing off $116 million of the
unfunded portion of the Medicaid and Medicare bill. That money
will be diverted from taking care of services for folks who
cannot pay to pay for new facilities that aren't even needed.
That is why, in Providence's view, the $1 million threshold has
worked well.
MR. SELBY said that Providence agrees with the Alaska State
Hospital Association that raising the $1 million threshold to $2
million makes good sense because of inflation. If one runs the
consumer price index (CPI) on construction, the $1 million amount
when the bill was passed would now equate to about $1.8 million.
Providence believes a $2 million threshold for facilities makes
sense but it suggests that the committee split facilities and
equipment and leave equipment at $1 million because those costs
are actually decreasing. When the CON program first came into
existence, a CAT scan machine cost less than $1 million; it is
now available for about $600,000.
MR. SELBY said the other issue that Providence has discussed in
relation to the CON program is that it provides quality of care
control in Alaska. A recently published study in Florida
compared states with and without CON programs. One finding is
that the risk-adjusted, in-hospital mortality was 21 percent
higher in states without CON programs than in states with CON
programs. Health care is a little different from other industries
rd
auto sales shop opens up in town because consumers can go buy an
auto for the lowest possible price. However, when it comes to
health care, finding the cheapest heart surgeon may not be the
best criteria to use. Key questions asked during a CON
application are whether there is enough need in the state for a
second or third facility and will the number of patients being
seen in any one of those facilities be below a level to keep the
service providers competent. National standards have been set up
to determine at what level providers are staying competent. In
terms of neonatal care, Anchorage is barely above the threshold
for one facility. Providence health care providers could not
stay certified and competent in neonatal intensive care if a
second facility opened. The CON program's role is to look at
whether the proposed service is necessary and might dilute other
providers below a quality of care level.
CHAIRWOMAN GREEN said she has not reviewed the entire list from
the Association and Mr. Selby but she noted that Providence
quickly spotted some things that can be modified to make the
program more consistent and accurate. She commented that the
standards for state management should be very high.
2:10 p.m.
SENATOR WILKEN maintained that Mr. Selby said the CON program
protects the state from excessive medical charges. He asked Mr.
Selby if by that he meant it has an effect on the budget.
MR. SELBY replied, "Absolutely."
SENATOR WILKEN said that last week, committee members had an
interesting conversation and established the CON is essentially
just that -a study of need without any consideration of the state
budget, other than some sort of ballpark sense of what may happen
if a request is accepted or denied. He then asked:
So enter then, the private clinic, as in my town, that
says - hey, we know there's a need and we're willing to
risk $5 million to show that we can make it. We think
that there's a need in our town and we're willing to
gamble our money. What is the purpose then of the
Certificate of Need program through the state if we let
private industry do it. What problems does that create?
You suggested quality of care, perhaps. Obviously in
your case, and perhaps in my town, some sort of
suggested or real damage to the existing facility - my
hospital, your hospital - but to me that's balanced
off, that may happen but that's balanced off - to the
benefit of the consumer. Is it truly cheaper to do it
in the new facility than in the existing facility?
That's something we have to develop at this table and I
think that's our next step.
That's what I'm struggling with. I don't quite
understand why we need a CON at all if private industry
is willing to step up and validate the need, as long as
we're not damaging our existing facility and that
damage - if we are - is on balance, benefits the
consumer. So that's what I'm struggling with in this
whole issue. Would you maybe just wander a little like
I have?
MR. SELBY said he would start with the budgetary impact. First of
all, the new facility has to be paid for even though nothing has
been added to health care that is not currently being delivered.
What has changed is that a service is now being delivered in two
different places without an increase in available funds. The
costs of the new facility will have to come out of what is
currently being spent for health care. That's where the damage to
the existing facility comes into play because money is
transferred from it to help pay for the new facility. The
existing facility will be forced to reduce something. The amount
of charity care and bad debt written off is what has to be
stopped but that is unacceptable in our society so the existing
facility will have to raise prices. The new facility will have
nowhere near the overhead of the existing hospital because it
doesn't have to be open 24 hours per day and it will not have to
staff an emergency room. Hospitals have a lot of overhead costs
that an 8 to 5 operation does not. The problem, from
Providence's perspective, is that a little money may be saved by
using specialty clinics - maybe 15 to 20 percent of the total
health care expenditure - but hospitals that take care of the
other 80 percent will have to raise prices. The state will have
to pay more for Medicaid and Medicare and it will really "get
hammered" on its health insurance bill for state employees
because everyone's health care costs will increase.
MR. SELBY said he would wager that the total cost will increase
by the amount that equates to the cost of the additional
facilities that are allowed to come in.
SENATOR WILKEN replied,
But the new cost of the new facility - or the five as I
have offered a month ago - the new cost of the new
facility is only the fixed cost. There [aren't] people
waiting out there for a new facility in order to come
get their knee operated on. We know the demand - there
is no pent up demand - I mean that is flat. So, once
we open it we know that some [will] go to the new and
some will stay with the old because that's consumer
choice. So the only additional cost is the fixed cost.
Right? We have to cover the fixed cost.
MR. SELBY answered:
Not totally because again, at the hospital they're
still going to have to staff regardless of how much
comes through there because they've got this 24-hour
day - the stuff I mentioned. So there's going to be
some additional staff cost that you're going to absorb
in addition to the fixed cost, in terms of delivery.
That's why the hospital will have to raise its prices
in order to cover those costs because while the new
facility - you know, they're going to go hire nurses
from the hospital to come over and go to work and do
all those sorts of things and so their costs for the
actual surgery itself should be less. Quite frankly,
there's something wrong if it's not. But the hospital's
cost does not come down equally to what the cost of the
new staffing at the new center is because they still
have other demands and 24-hour requirements...and you
know if the nurse is now only taking care of two
patients instead of the five she used to take care of,
you still got to pay her the same wages.
SENATOR WILKEN asked if charity work is done by all medical
facilities.
MR. SELBY said it is but they have the ability to shed it and
send the no-pay clients back to the hospital.
SENATOR WILKEN said he is an employer of 20 blue-collar workers.
Insurance premiums for those employees and their families have
increased $385 per month over the last 18 months. He wants to do
something to help his insurance company drive down that cost so,
if the quality of care is equal, he would encourage his employees
to use the less expensive service. His dilemma is trying to
balance that need with the needs of the existing hospital.
2:15 p.m.
SENATOR DAVIS said she is confused about what the committee is
taking testimony on because she does not know what will be
included in the new committee substitute since committee members
do not have a copy and the amendments and suggestions were not
shared with her. She noted that five or six people testified in
support of the proposed committee substitute that was discussed
last week, because it would place a moratorium on psychiatric
beds. She asked Mr. Selby to speak to that issue.
MR. SELBY said Providence has not taken a position on the
moratorium on psychiatric beds because it believes if the CON law
in effect is properly applied, it would render a moratorium a
moot issue. The CON program coordinator would determine whether
or not a need exists.
SENATOR DAVIS asked if the moratorium remains in the bill, and
the bill passes, whether anyone who applied for psychiatric beds
would not be able to move forward.
MR. SELBY said that would become an issue for Providence.
SENATOR DAVIS maintained that is the issue that needs to be
addressed.
MR. SELBY said Providence has a CON application for additional
psychiatric beds on the Commissioner's desk, awaiting approval.
Providence has documented the need for those beds.
SENATOR DAVIS said she feels at a loss because the committee is
discussing a proposal that it does not have, and Mr. Selby is
saying that Providence has not taken a position but would have an
issue with that provision if it comes up. She asked Mr. Selby if
Providence supports the moratorium.
MR. SELBY replied that it is his understanding that the language
of that provision says the moratorium would apply to any CON
application filed after the effective date of the bill. Action
will be taken on Providence's application before the effective
date. He noted it will be of great concern to Providence if the
date is made retroactive.
2:18 p.m.
SENATOR DAVIS said another issue discussed by committee members
was the cost of the CON process and whether the program is
necessary at all. She said if a new hospital was able to come on
line, the same pool of staff in that locality would be split
between the two facilities. She felt that lack of staff could
raise a quality of care issue and asked Mr. Selby his opinion of
that possibility.
MR. SELBY said he addressed that concern in testimony at a
previous hearing and it is a huge concern. If additional
facilities are built, they will hire nurses away from the
existing facilities who already have a problem. He said that
every hospital in Anchorage has been on "divert" many times
during the last few months. Most diverts are caused because the
beds are full but occasionally hospitals have to divert because
of a staff shortage. He said the staff shortage is a very real
issue, which is why Providence has asked the Legislature to help
fund training for 50 additional nurses per year and for loan
forgiveness for nurses, pharmacists, x-ray and lab technicians.
SENATOR DAVIS asked Mr. Selby to share with her the compromise
language he has offered to the committee regarding changes to the
bill.
MR. SELBY agreed to do so.
2:22 p.m.
CHAIRWOMAN GREEN said:
One of the things we don't want to imply is that
because we are a facility and have an existing facility
there should be no others and that's not a good message
to send. And if we're going to say that if someone
else comes in and builds facilities then everything
goes awry then I would suggest that some of the
applications under review for over $25 million,
etcetera, are probably not valid, and then that those
that have been reviewed over the last five or six years
probably shouldn't have been approved and that's
probably not a good way to be either but there is no
reason to have limited entry hospitals in the state of
Alaska.
She then took public testimony.
DR. CHANDLER, testifying via teleconference, informed the
committee that he has had a bad experience with the CON program
over the last 30 years, most recently with the Providence CON.
He has been fighting Providence Hospital in court over a quality
of care issue for five years and recently got a judgment against
Providence for approximately $2 million. His concern is that
Providence Hospital, in his opinion, is a total monopoly that
many areas of medicine have been unable to compete with. He built
the first surgi-center in Anchorage in 1976, the second in 1985,
and the third has just been completed. The second center was
closed because of the CON. He has developed the competitive
forces for outpatient surgery in Anchorage and has documentation
of the profitability of Providence Hospital over the last 30
years. According to the DHSS Medicare Rate Advisory Commission,
in 1998 Providence had approximately 80 percent of all of the
beds in Anchorage. Providence's estimated net profit in 2001 was
about $55 million according to court documents. In those same
documents, Providence's projected revenue for its hospital system
nationwide is 1 to 3 percent of $3 billion. When a small company
tries to compete with a company such as Providence, the amount of
money it must direct toward the CON application nearly eliminates
all private health care companies. He has expended approximately
$400,000 of his own money to file a lawsuit against Providence
and to get the issue of pain management on the forefront.
Providence Hospital said that unless its lawsuit went above $3 to
$5 million, it would not bring the issue of pain management to
the board level for consideration of quality of care issues. He
is concerned that the CON no longer serves the purpose of
creating state oversight but instead allows monopolistic
hospitals in both Anchorage and Fairbanks to control the entire
market of hospital beds and outpatient surgery. He added that
Providence Hospital brought in its "powers" to the Federal Trade
Commission (FTC) to split a merger between Alaska Regional
Hospital and the surgery center in the early 1990s. Since that
time, Providence Hospital has gone ahead and built a $45 million
expansion for an ambulatory procedures department.
DR. CHANDLER said he has been in Alaska for 30 years, on the
staff at Providence Hospital and he has been an active member of
the voting staff of Providence since 1971 or 1972. He said he is
not out to injure Providence; his goal is to bring competition in
Anchorage to the highest level so that quality of care is
provided. He is still in active pursuit of trying to create
better health care in Anchorage through competitive forces but he
continues to reach the same bottlenecks that he has for the last
10 years. He thanked members for their time.
2:29 p.m.
MR. CHARLES FRANZ, Administrator of the South Peninsula Hospital
in Homer, said that as the administrator of a rural facility, his
primary concern with the CON is that, "We need to preserve a
program that limits the proliferation of facilities to only those
necessary to adequately serve the needs of the people." He said,
regarding an earlier comment that it is important to let market
forces work, private organizations coming into the health care
market are not going to offer 24 hour per day emergency room
services and are not going to treat anyone who shows up at the
door, regardless of ability to pay. The community suffers because
it either loses access to those services or it must pay much more
to have those services provided. It also suffers because the
human resources to provide those services are limited.
KIM PICKEREL, Market Coordinator for Health South in Alaska,
explained that Health South is the largest health care provider
in the United States, providing ambulatory services, such as
outpatient surgery, diagnostic and physical therapy and
rehabilitation. Health South's goal and mission is to provide
quality care in a cost and time efficient manner. She stated
support for SB 256. The Alaska Surgery Center is the recipient of
Denali Kid Care and Medicaid patients daily and, in fact,
approximately 12 percent of its revenues were for those
recipients. SB 256 will allow corporations such as Health South
to expand their businesses and offer Alaskans an alternative and
choice in health care.
KATHY CRONEN, CEO of North Star Behavioral Health, said she would
like to clarify some confusing information given in regard to the
moratorium. The moratorium on psychiatric beds is critically
important for two reasons: it provides a brief period of time to
plan adequately for the provision of mental health care in
Alaska. As she reads the legislation, it will impact the
Providence CON and will hold the application in abeyance until
the planning period is over. The second reason a moratorium is
important is that, for the first time, DHSS will be allowed to
consider the fiscal impact of its decision to approve more acute
care beds. She stated there is a substantial difference between
the acute care per day rate and the residential treatment rate.
She believes, particularly with the state's budget crisis, DHSS
needs to consider the fiscal impact of adding more beds.
CHAIRWOMAN GREEN commented that a precedent exists for the
moratorium with the one placed on nursing home beds. She then
explained to Senator Davis that this bill has been in a state of
flux because she has been trying to listen to various people who
have been unable to attend committee meetings. She said she will
distribute a copy of the proposed committee substitute to members
as soon as it is ready. She then drew members' attention to the
statute for the CON program and read:
Application for a certificate of need shall be made to
the department upon a form provided by the department
and must contain the information the department
requires to reach a decision under this chapter. Each
application for a certificate of need must be
accompanied by an application fee established by the
department by regulation.
She said the program has a hole or a vacuum that is creating
problems for a variety of people. The forces that be and already
have interests in the state are going to oppose change. She
stated the Nursing Home Association came up with some great
suggestions to improve the CON process.
SENATOR DAVIS expressed concern about the committee process. She
said this issue is a complex and important one that cannot be
addressed by taking testimony while all of the information is
given to one person. Senator Davis suggested that this issue
should have been studied by a subcommittee and noted she was not
trying to imply that Chairwoman Green had done anything wrong.
CHAIRWOMAN GREEN thanked Senator Davis and announced that the
committee would hear SB 293 on Monday, as well as SB 256 if the
committee substitute is ready.
SENATOR WILKEN noted that he has found the meetings on SB 256 to
be very beneficial. He added that the committee has spent six
meetings discussing the effect of the CON program on the state
and different entities. He believes the committee must also look
at the benefit to the consumer. He said he would like to get
information on the cost of procedures done at hospitals versus
ambulatory-surgi facilities.
CHAIRWOMAN GREEN agreed and said Senator Wilken's earlier comment
about how the cost of health care impacts the businessperson goes
right back to how this discussion originally began, and that was
with the impact on Medicaid. Yet, the people who evaluate CON
applications are prohibited from considering the cost of doing
business. There being nothing else to come before the committee,
CHAIRWOMAN GREEN adjourned the meeting at 2:41 p.m.
| Document Name | Date/Time | Subjects |
|---|