Legislature(2005 - 2006)CAPITOL 106
04/20/2006 03:00 PM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| HJR36 | |
| HB287 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 36 | TELECONFERENCED | |
| += | HB 287 | TELECONFERENCED | |
| += | HB 468 | TELECONFERENCED | |
| += | HJR 30 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
April 20, 2006
3:06 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Carl Gatto
Representative Vic Kohring
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative Paul Seaton, Vice Chair
Representative Tom Anderson
OTHER LEGISLATORS PRESENT
Representative Max Gruenberg, Jr.
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 36
Urging the United States Congress to support the granting of
official Observer Status to the Republic of China at the World
Health Assembly Annual Conference to be held at Geneva,
Switzerland, in May 2006.
- MOVED CSHJR 36(HES) OUT OF COMMITTEE
HOUSE BILL NO. 287
"An Act amending the certificate of need requirements to apply
only to health care facilities and nursing homes located in a
borough with a population of not more than 25,000, in the
unorganized borough, or in a community with a critical access
hospital."
- HEARD AND HELD
HOUSE JOINT RESOLUTION NO. 30
Relating to public health and a prevention compact.
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 468
"An Act relating to disclosure of employment information on a
medical assistance application and a hospital intake report; and
requiring the Department of Health and Social Services to
prepare and publicize a report pertaining to employers who do
not provide health insurance."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HJR 36
SHORT TITLE: TAIWAN: WORLD HEALTH ASSEMBLY
SPONSOR(s): HEALTH, EDUCATION & SOCIAL SERVICES
04/10/06 (H) READ THE FIRST TIME - REFERRALS
04/10/06 (H) HES
04/20/06 (H) HES AT 3:00 PM CAPITOL 106
BILL: HB 287
SHORT TITLE: MEDICAL FACILITY CERTIFICATE OF NEED
SPONSOR(s): REPRESENTATIVE(s) LYNN
04/27/05 (H) READ THE FIRST TIME - REFERRALS
04/27/05 (H) HES, L&C, FIN
03/28/06 (H) HES AT 3:00 PM CAPITOL 106
03/28/06 (H) Heard & Held
03/28/06 (H) MINUTE(HES)
04/13/06 (H) HES AT 3:00 PM CAPITOL 106
04/13/06 (H) -- Meeting Canceled --
04/20/06 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
AARON DANIELSON, Intern
to Representative Peggy Wilson
Alaska State Legislature
POSITION STATEMENT: Presented HJR 36 on behalf of the House
Health, Education and Social Services Standing Committee, which
Representative Wilson chairs.
REPRESENTATIVE BOB LYNN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the prime sponsor of HB 287.
BOB URATA, MD, President,
Board of Directors
Bartlett Regional Hospital
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to HB 287.
RICHARD COBDEN, Orthopedic Surgeon
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 287.
BRIAN SLOCUM, Administrator
Tanana Clinic
Fairbanks, Alaska
POSITION STATEMENT: During hearing of HB 287, expressed the
need to focus on taking care of sick people, spending the
community's health care dollars for the critical needs, and
trying to move from the business of maximizing hospital profits
at the expense of the rest of the health care system.
MIKE POWERS
Fairbanks Memorial Hospital
Fairbanks, Alaska
POSITION STATEMENT: Testified on HB 287.
DAVID GILBREATH, CEO
Central Peninsula General Hospital
Soldotna, Alaska
POSITION STATEMENT: Testified in opposition to HB 287.
DENNIS MURRAY, Chair
Alaska State Hospital and Nursing Home Association Legislative
Committee
Juneau, Alaska
POSITION STATEMENT: Expressed concerns with HB 287.
JEREMY HAYES, Representative
Advanced Medical Centers of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 287.
CHARLIE FRANZ, CEO
South Peninsula Hospital
Homer, Alaska
POSITION STATEMENT: During hearing of HB 287, expressed the
need to maintain the current CON law.
JOHN BRINGHURST, CEO
Petersburg Medical Center
Petersburg, Alaska
POSITION STATEMENT: Testified in opposition to HB 287.
ELIZABETH RIPLEY, Director
Marketing and Public Relations
Mat-Su Regional Medical Center
Palmer, Alaska
POSITION STATEMENT: Testified in opposition to HB 287.
PAUL FUHS, Lobbyist
Alaskans for Medical Choice and Competition
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 287.
LAURIE HERMAN, Regional Director
Government Affairs
Providence Health & Services - Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 287.
ROD BETIT, President
Alaska State Hospital and Nursing Home Association
Juneau, Alaska
POSITION STATEMENT: Testified on HB 287.
ACTION NARRATIVE
CHAIR PEGGY WILSON called the House Health, Education and Social
Services Standing Committee meeting to order at 3:06:57 PM.
Representatives Gatto, Cissna, Gardner, and Wilson were present
at the call to order. Representative Kohring arrived as the
meeting was in progress.
HJR 36-TAIWAN: WORLD HEALTH ASSEMBLY
3:07:37 PM
CHAIR WILSON announced that the first order of business would be
HOUSE JOINT RESOLUTION NO. 36, Urging the United States Congress
to support the granting of official Observer Status to the
Republic of China at the World Health Assembly Annual Conference
to be held at Geneva, Switzerland, in May 2006.
3:07:55 PM
AARON DANIELSON, Intern to Representative Peggy Wilson, Alaska
State Legislature, presented HJR 36 on behalf of the House
Health, Education and Social Services Standing Committee. He
paraphrased from the following statement [original punctuation
provided]:
· Taiwan does not have direct access to the information that
is disseminated in the World Heath Assembly [WHA] meetings.
The World Health Assembly is the top body of the World
Health Organization [WHO].
· Taiwan can be introduced as an Official Observer status,
something that there is precedent for. The Red Cross,
Palestine Liberation Organization, Red Crescent and the
Order of Malta are several of the organizations that have
been recognized as a "health entity" and given Official
Observer status.
· This process of being given Official Observer Status also
side-steps the thorny sovereignty. This process does not
recognize Taiwan as separate entity from China.
· China has opposed Taiwan's attempts to enter the WHO as a
member and as an official observer. They have allowed
Taiwan to attend WHO meetings on Avian Influenza in Japan
and other cities, but has denied Taiwan's entering a
similar conference in Beijing China.
· The Alaska House passed a similar resolution in 2003 as
[House Joint Resolution] 28, urging the U.S. to endorse
Taiwan's request to be granted observer status.
· The U.S. Congress has also passed similar resolution to
support the efforts of Taiwan to gain Official Observer
Status into the WHA.
· The WHA Director can extend Official Observer status to
Taiwan itself, without a vote.
· On June 2004, Pres. Bush signed into law S2092, that
st
supports Taiwan's bid to enter the WHA. Every April 1,
the State Dept. is to submit a report to Congress on their
efforts to gain Taiwan access to the WHA. House passed a
st
similar one on April 21. Both passed unanimously.
3:11:24 PM
REPRESENTATIVE GARDNER asked whether the Peoples Republic of
China opposes this action.
MR. DANIELSON responded that Taiwan originally requested a full
membership, in 1997. However, China vigorously opposed full
membership, which it views as a threat to the sovereignty policy
of "one China." China has maintained opposition to Taiwan
entering even under observer status, although it has allowed
Taiwan to attend two separate WHA meetings regarding the avian
influenza.
3:12:43 PM
REPRESENTATIVE GARDNER moved Amendment 1, which read:
Page 2, line 8;
Delete "Condoleeza"
Insert "Condoleezza"
There being no objection, Amendment 1 was adopted.
3:13:45 PM
REPRESENTATIVE CISSNA moved to report HJR 36, as amended, out of
committee with individual recommendations and the accompanying
zero fiscal note. There being no objection, CSHJR 36(HES) was
reported from the House Health, Education and Social Services
Standing Committee.
HB 287-MEDICAL FACILITY CERTIFICATE OF NEED
3:14:22 PM
CHAIR WILSON announced that the final order of business would be
HOUSE BILL NO. 287, "An Act amending the certificate of need
requirements to apply only to health care facilities and nursing
homes located in a borough with a population of not more than
25,000, in the unorganized borough, or in a community with a
critical access hospital."
3:15:01 PM
REPRESENTATIVE BOB LYNN, Alaska State Legislature, speaking as
the prime sponsor of CSHB 287, paraphrased from the following
statement [original punctuation provided]:
During the last hearing, opponents testified at length
against the bill to almost the entire HESS committee.
However, due to other legitimate commitments, when it
came time for people to speak before the committee in
favor of the bill, there was only one committee member
present! Therefore, for all practical purposes, this
will be really the first time the committee will have
an opportunity to hear both sides of the issue - so I
want to thank you for hearing the bill today.
I know that some of you have concerns that need to be
addressed, and that's what the committee process is
for. So let me try to put myself in your shoes, if I
can, and ask, "What possible reasons are there for not
moving this bill out of this committee and along
through the Judiciary and Finance Committees?"
1. Let me ask. Would it harm patients to repeal the
Certificate of Need law? No! Like you, I would never
want to harm patients. Patients would not be harmed.
In fact, patients would likely benefit from greater
availability of facilities - and that usually means
lower costs.
2. Let me ask. How can hospitals afford to care for
the indigent at no cost, if they are unable to recoup
those costs by charging extra at hospital profit
centers? Well, first of all, anyone who makes that
argument is admitting that some patients are being
overcharged. It reminds me of the logic of the sign
on a well-known bar in Anchorage that proclaims, "We
cheat the other fellow and pass the savings on to
you!" Secondly, as at least one of you heard at the
previous hearing, a lot of medical providers in all
categories do - in fact - provide charity care for the
indigent. Charity is a virtue. Overcharging the
fortunate is - well - "overcharging," and you can call
that what you will.
3. Let me ask. Have you considered the fact that,
if the bill before us today doesn't pass, that it
opens the door to an Initiative that has already been
certified by the Lieutenant Governor? The difference
between the bill and the Initiative is that the bill
applies only to communities of 25,000 or more, and the
Initiative affects every place in Alaska, regardless
of population. As a co-sponsor of that Initiative, I
can tell you that we wanted the Initiative to apply
only to places with a population of 25,000 or more
like the bill before you today - but that was not, I'm
sorry to say permitted by law, as interpreted by the
administration. The bottom line is, the bill before
you today may address some of your concerns better
than the Initiative. If the bill passes, the
initiative will be dropped.
4. Let me ask. What about the big dollar fiscal
note attached by the administration? Well, as
expected, health care monopolies, and others with
vested interests, have responded the only way they can
- by attaching humongous fiscal notes to both my bill
and the initiative. To paraphrase Ronald Reagan,
"There they go again!" I can also tell you, we have
yet to obtain any verifiable - or even commonsense -
data for the fiscal note. There are experts here
today ready to testify on what is, and is not, a
reasonable fiscal note - and you would be better
served to hear from them rather than me.
5. Let me ask. Is it a good thing for large
hospitals to have a monopoly provided by the state?
There's a Principle involved here - and the Principle
is not and should not be socialism or Marxism, the
Principle is free enterprise. It's informative that
someone who wrote an editorial in today's Daily News
opposing my bill has written a book that's part of a
series of "studies in Marxism!" Good Principles - and
I believe free enterprise is a good Principle have, by
definition, a wide application. We don't choose
worthy Principles in a some kind of philosophical
cafeteria line - "We'll take this Principle, but not
that Principle." That said, the least we can do, if
we decide to keep the current discriminatory system,
is to call the Certificate of Need exactly what it is
- a "Certificate of Monopoly."
In conclusion, Madame Chair and Members of the
Committee, I urge you to consider carefully all sides
of this debate. But please don't be afraid to
challenge the status quo. I urge you to let the bill
run the entire committee process to which it has been
referred: the 7 legislators of your HESS committee,
the 7 members of the Judiciary Committee, and the 11
members of the Finance Committee, so that at least 22
legislators will have enjoyed a fair opportunity to
evaluate, make any changes to the bill, and vote as
they may.
I think HB 258 [287] is a good a timely bill,
otherwise I would not have sponsored it - and it is,
in fact my priority legislation for this session.
Thank you.
3:20:05 PM
BOB URATA, MD, President, Board of Directors, Bartlett Regional
Hospital, testified in opposition of HB 287, paraphrasing from
the following written statement [original punctuation provided]:
I'm Bob Urata MD, a family physician, born and raised
in Wrangell, Alaska and have lived in Juneau since
1984. I am here as President of the Board of
Directors of Bartlett Regional Hospital to speak
against HB 287 which would be detrimental to the
public.
The certificate of need (CON) program in Alaska was
started in 1976 to protect the public's interest in
health care by controlling health care costs, promote
quality of care and access to care. It has become one
of the most comprehensive programs in the US covering
up to 26 out of possible 30 services.
One of the most important aspects of the CON program
is that it is an open public process. In order to
assure order and fairness in health facility and
health service planning, public input is a must.
Everyone is affected, everyone should have a say in
how things develop.
HB 287 targets communities in Alaska over 25,000
people which mean only 6 communities will be affected,
one of them is Juneau. Our 57 bed hospital will be
adversely affected financially with the removal of the
CON process. With removal of the CON process, an
ambulatory surgery center or a diagnostic imagining
center would be built by an entrepreneur, "cherry
picking" the highest paying patients seriously
reducing revenue and crippling the operations of the
hospital which needs to stay open 24 hours and 7 days
a week. This would lead to shortages of critical
staff which in turn lowers quality. Fees will need to
increase to cover loss of revenues. It is well known
that in health care economics "supply drives demand",
that is the more supply, the higher the demand and
thus spending. Competition in health care does not
lead to lower fees or costs but increases it, because
consumers do not shop for health care and they lack
information to make the economic health care
decisions. Providers control supply and can determine
demand. Finally a third party like private insurance
or Medicaid/Medicare pays the charges. Providers have
no incentive to lower fees. So with higher capacity
come higher health care costs. The CON process is
needed to guide this because health care and services
as a marketplace do not follow the usual rules of an
ordinary economic commodity.
The CON process maintains or improves quality of care.
An example is limiting cardiac surgery in communities
so that there is no excess capacity. Cardiac surgeons
need to do a certain number of cases to maintain
proficiency. If there are too many cardiac surgery
centers in a community, then quality gets worse.
Studies that support my position may be found in the
American Health Planning Association web page at
www.ahpanet.org. There studies by the 3 American car
companies show that in states with CON, health care
costs per person were 33% to 164% lower than those
without. Ford Motor found that inpatient, outpatient,
MRI [magnetic resonance imaging], and CABG [coronary
artery bypass graph] charges were 10-39% cheaper in
states with CON compared to those with none. Charges
in Freestanding Ambulatory Surgery Centers in 1999
were about 20% lower in states with CON than those
without CON.
Looking at quality, CABG Mortality was about 20% lower
in CON states than in those states without CON in
Medicare beneficiaries in 1994-1999.
It is my opinion the CON process should continue for
all Alaskans because it protects the public's interest
by providing a public forum for important health care
service and facility planning, maintains accessibility
to health care services, maintains quality health
care, and helps with cost containment.
3:27:19 PM
REPRESENTATIVE GATTO encouraged Dr. Urata [leaving to attend to
a patient] to provide a means, probably via telephone, for
questions during the meeting.
3:27:53 PM
RICHARD COBDEN, Orthopedic Surgeon, stated support for HB 287,
adding that he has done quite a bit of research on the subject
of the legislation. He related that he had quite a bit of
experience with the CON when he worked in California. In fact,
he was part of a task force that eventually lead the California
legislature to drop the CON almost 25 years ago. In California,
the costs averaged 10-50 percent higher when the CON was in
place than when it was absent.
DR. COBDEN then turned to Fairbanks, which he characterized as a
monopolistic system, with only one hospital and thus if a
patient can't get into the Fairbanks hospital, he/she must
travel to Anchorage. Also, in Fairbanks there is a group of
physicians who are denied privileges at Fairbanks Memorial
Hospital because it holds an exclusive contract for certain
procedures to be supplied to the hospital by one physician.
Furthermore, the cost of services at Fairbanks Memorial Hospital
is very high. For example, the cost of a knee replacement
device from the company and to the hospital was $3,000 while the
hospital patient was charged $16,000. The patient protested,
but was told that the aforementioned was the average markup for
devices at Fairbanks Memorial Hospital.
DR. COBDEN related that his primary concern with having one
hospital is that in the event of a large scale
catastrophe/disaster, there is no alternative locally. To
continue this monopoly at Fairbanks Memorial Hospital is leading
to a possible catastrophe in itself. From the last hearing, Dr.
Cobden recalled testimony likening health care to a national
monopoly much like utilities of electricity, gas, and water that
the testifier indicated should be preserved as such for
efficiency. In response, Dr. Cobden emphasized that health care
is an essential service and it doesn't make sense to have it so
centralized without alternatives. For example, he questioned
whether food should be required to be distributed by one grocery
store. Dr. Cobden opined that the CON is obsolete and should be
dropped.
3:33:47 PM
DR. COBDEN, in response to Representative Gardner, specified
that currently he is a practicing orthopedic surgeon who works
in the Advanced Medical Centers of Alaska.
3:34:28 PM
REPRESENTATIVE GATTO addressed Dr. Cobden's comment that a
utility is a service and monopolies are established for the
benefit of citizens. The aforementioned appears to work.
However, if Bartlett Regional Hospital was subjected to intense
competition and/or cherry picking and it were to close due to
its inability to function, [the community/state] would be worse
off than if the hospital was protected. He asked if that would
be the case.
DR. COBDEN agreed that it would be a disaster to close Bartlett
Regional Hospital. However, with regard to the suggestion that
there would be cherry picking, he questioned whether such would
really happen. He then reminded the committee that Medicaid and
the state pays a premium of around 24 percent above and beyond
the care guarantee of any other institution to the hospital in
order to pay for the additional unpaid patients. Furthermore,
the charity provided by hospitals is actually less than that
provided by private practitioners and other groups. Moreover,
the charge that cardiac surgery, a very lucrative procedure for
hospitals, would be performed outside of a hospital at an
inferior quality is a fallacious argument. No surgeon would
perform cardiac surgery outside of a hospital setting. Dr.
Cobden clarified, "Nobody is arguing about setting up a new
hospital; what we're talking about is surgery centers, which can
do outpatient, minor procedures at a low cost in direct
competition with hospitals." The aforementioned, he opined,
won't seriously impact the bottom line of existing hospitals,
including Bartlett Regional Hospital. In fact, most studies
have shown that the maximum that a hospital seeks to lose in the
event of a competitive outpatient surgery center is 5 percent of
the facility's bottom line.
3:39:00 PM
CHAIR WILSON inquired as to the hours of the surgery center [in
the area].
DR. COBDEN answered that if a surgery center were built, it
would be open on a 12 to 24-hour basis depending on demand. It
would not be possible to establish a surgery center that
provided 24-hour care because that requires licensure through
the state and the joint commission. When acute patients are
kept more than 24 hours, different criteria must be met.
CHAIR WILSON surmised then that a surgery center wouldn't be
open for patients to come at any hour. "There might not be as
much pro bono work as at a hospital or there might be more for
you guys that go to some clinic and give free care. However,
there is a difference for the hospitals that have to take
everyone that come into that emergency room whether they'll pay
a penny or not," she pointed out.
DR. COBDEN acknowledged the difference.
3:40:28 PM
REPRESENTATIVE GATTO returned to the matter of cherry picking
and highlighted the cherry picking that occurred when UPS and
FedEx entered the postal services. Therefore, he suggested that
he would be surprised if a company entered the market and didn't
cherry pick.
MR. COBDEN opined that it would be unethical if it happened.
With regard to FedEx offering postal services, Dr. Cobden
reminded the committee that the postal service didn't have
overnight mail. Furthermore, when the postal service faced
competition, it increased its services and improved delivery.
3:42:03 PM
BRIAN SLOCUM, Administrator, Tanana Clinic, provided the
following testimony:
It seems to me that all this fighting over certificate
of need issues ignores a basic business truth for all
health care organizations in 2006, that is that no one
... gets paid enough by Medicare or Medicaid or
patients who have no insurance to stay in business for
very long. And no one can remain solvent by providing
only the basic bread and butter health care services
to patients. Frankly, both hospitals and doctors can
only remain in business over the long haul by treating
some patients who have private insurance that pay more
than the federal government pays and pay more than the
folks without insurance and by offering other services
which pay a little bit better, such as laboratory and
X-ray services. So, by doing everything that is
possible to maximize hospital profits you really risk
marginalizing the non-hospital components of our
entire health care system. That's especially true, I
think, of physicians and clinics. And not only is it
true of physicians and clinics, but is especially true
of those physicians and clinics in Fairbanks.
Our situation here, with respect to doctors, is pretty
grim these days. The number of physicians per 100,000
population in Fairbanks is about 179 per 100,000
population. That means that Fairbanks has about 20
percent fewer physicians per capita than Anchorage
does and about 40 percent fewer positions per capita
than the national average. When you look at how many
patients a doctor sees, that translates to about 2,000
patients every week who have no access to care. That
is going to get worse as time goes on. One of the
things that happens when you have a lack of ...
primary care physicians in a community is that the
mortality and morbidity rates ... goes up. And that's
proven by the state's health department's mortality
figures. Frankly, in Fairbanks our mortality is 5
percent higher than the Alaska state average and it's
8 percent higher than the national average across the
country. That means that every year about 148 people
die needlessly in Fairbanks than would have to have
died if we'd had sufficient physicians to have the
same death rate as we have throughout the state. And
even worse is that about 245 extra needless deaths
take place in our community every year compared to
what would've happened had we had the national average
number of physicians. And as I said, it's going to
get worse. More than half of the physicians in
Fairbanks these days are over 50 years of age and
recruiting new physicians to Fairbanks is becoming
increasingly difficult. Part of the reason it's tough
to get folks to Fairbanks is, of course, the
reputation of Alaska in general and of Fairbanks as
being remote and having some tough weather in the
winter time. But an increasing part of the difficulty
of getting doctors to come to town is that we simply
can't compete as an economic place to come and set up
practice. The reason that's happened is because much
of the restrictions put on physicians by the
certificate of need law and frankly, the ... somewhat
hostile approach of our local hospital to new doctors
and to new services being provided by doctors. It
makes it a difficult place to financially maintain a
practice. As a result, we just don't get candidates
into town any more. So, frankly, I think the
situation in 5 or 10 years is going to be a real
disaster.
We've been focusing so much on hospital profits that
we forget that no one delivers health care, except
doctors, and nurses, and technicians .... And
frankly, I don't understand how the hospitals can keep
saying that they make no money. I have had the
opportunity to check the form 990, which is the tax
returns for our local hospital. It demonstrates that
in the period between 1997 and 2004, they made $119
million in profit. I don't know how much more profit
an organization like that needs before they can feel
safe and let up a little bit on the demand for
increasing restrictions on physicians. At last
report, at the end of 2004, which is the most recent
report available, the local hospital here had $105
million in cash and negotiable securities in their
bank account. They're engaged in a $175-$200 million
billing campaign. And I'm all in favor of them doing
that and I think the whole community is, but one has
to ask if it's the best use of funding given the fact
that we have too few physicians and too many people
dying and we have 15,000 people in our community
without any access to care due to lack of health
insurance. So, I wish we could focus on the really
important things here and that really important thing
is taking care of sick people and spending our
community's health care dollars where it's really
critical and try to get away from this business of
maximizing hospital profits at the expense of the rest
of the health care system.
3:48:29 PM
MIKE POWERS, Fairbanks Memorial Hospital, informed the committee
that the Medicare Payment Advisory Commission recently issued a
new study demonstrating the importance of public policy when
there are physician-owned entities. Referring to Dr. Cobden's
comments, Mr. Powers informed the committee that Dr. Cobden has
about half of his schedule open for the next month. The
exclusive contract to which Dr. Cobden referred is probably in
place for a pain procedure because there is a need for only one
interventional pain specialist in the community. Furthermore,
the top procedures of Fairbanks Memorial Hospital are 50 percent
less expensive than the surgery center in Anchorage. With
regard to a disaster, Mr. Powers reminded the committee that
there have been three mass casualties in the late 1980s and
[Fairbanks Memorial Hospital] has never had an issue with regard
to handling those casualties through surgery and partnership
with the military community. Speaking to Dr. Cobden's comment
that hospitals perform less charity care than private
practitioners, Mr. Powers indicated that he must misunderstand
and thus will have to talk with the [Fairbanks Memorial Hospital
administration] about that. He related that Fairbanks Memorial
Hospital [performs] roughly 8 percent in bad debt, 3 percent in
charity, and extensive policies such that the hospital sees all
patients.
MR. POWERS then turned to Mr. Slocum's comments regarding
Fairbanks Memorial Hospital's approach to physicians, and
highlighted that the hospital, over the last three years, has
invested $250,000 [in recruiting staff]. Fairbanks Memorial
Hospital has an internal medicine physician coming, has
recruited an emergency medical technician (EMT), and has brought
four physicians into the community.
3:52:19 PM
DAVID GILBREATH, CEO, Central Peninsula General Hospital, began
by noting his agreement with Mr. Powers' testimony. He informed
the committee that the Central Peninsula General Hospital is a
62-bed acute care hospital with about 450 employees. The
hospital serves an area with a population of approximately
35,000. The Central Peninsula General Hospital has net revenues
of about $50 million of which about $5 million goes to
uncompensated care, charity, and bad debts. Mr. Gilbreath
opined that HB 287 could have a huge negative impact on the
Central Peninsula General Hospital as well as others in the
state.
MR. GILBREATH related that he fully supports competition and
free enterprise, but he highlighted that health care is a bit
different. He opined that there has to be a level playing
field, which this legislation doesn't create because it allows
surgery centers, imaging centers, and other niche providers to
enter a community with a hospital. The legislation would allow
cherry picking and uninsured and underinsured patients wouldn't
receive the care needed from the [niche providers] and thus
would fall to the responsibility of the community hospital. As
is the case in many hospitals, Central Peninsula General
Hospital loses money in the emergency room, obstetrics, and a
residential treatment center. The services at the hospital are
provided on a 24-hour basis every day and all patients are seen
regardless of the ability to pay. If HB 287 were to pass, the
margins the hospital requires to stay open could erode and make
it difficult to remain open. Mr. Gilbreath opined that if the
aforementioned niche providers enter the community, they will
skim off the paying patients the hospital needs to keep its
doors open. In conclusion, Mr. Gilbreath related his strong
opposition to HB 287.
3:55:35 PM
CHAIR WILSON acknowledged the presence of a group of students
observing the proceedings.
3:56:29 PM
DENNIS MURRAY, Chair, Alaska State Hospital and Nursing Home
Association Legislative Committee, began by noting that he is
the administrator of the Heritage Place Nursing Facility,
although he isn't speaking in that capacity. He then said he
would like to echo the remarks of Mr. Gilbreath. He then
highlighted that community hospitals are available 24 hours a
day, 7 days a week, 365 days a year. The aforementioned is
jeopardized when health care is segmented. With regard to the
comments about monopolies, Mr. Murray said that the CON doesn't
create such but rather creates a process by which a community
has input, through DHSS, upon which the department can determine
whether there is sufficient need for a competitive environment
or whether it would jeopardize the overall health care available
in a particular community.
3:59:02 PM
JEREMY HAYES, Representative, Advanced Medical Centers of
Alaska, testified in support of HB 287 and provided the
following testimony:
I support repealing our certificate of need laws as
Alaska continues to see some of the most expensive
health care in the country .... In 2006, depending on
which study you cite, Alaska is either the first or
second most regulated health care state in the country
and has costs that are 40 percent higher than the
national average. The stated purpose of the
certificate of need program is to foster a health care
system that controls costs and meets changing
conditions. Alaska's alarming health care costs
proves CON has failed in controlling costs. And in a
state experiencing growth and demographic change, the
CON law prevents providers from adapting to the
changing needs of the community effectively.
In states with no or less restrictive CON programs,
hospitals are increasingly facing competition from
ambulatory surgery centers, which offer minor surgical
procedures that do not require an overnight stay.
Hence, the 24/7 issue before. These facilities offer
the same surgery as the hospital, but at a
significantly lower price. It is one of the ways the
market is adjusting to make health care delivery more
efficient and cost effective for the public.
Established hospitals in heavily regulated states like
Alaska, however, use the CON law to prevent such
facilities from opening in their city. Thus, blocking
access to health care choice and lower costs to the
consumer. To give you an idea of the cost difference
between ambulatory surgery centers and hospitals, a
2005 Medicare study found that hospitals' outpatient
claims totaled $4.4 billion where the total for the
same claims in a surgery center would cost about $2.8
billion, a difference of nearly $1.6 billion. In
other words, taking only outpatient procedures into
account: if procedures in a hospital setting were
instead performed in a surgery center, Medicare would
have saved $1.6 billion in 2005. Of the nearly $5
million [in] claims studied in 2005, they averaged
$891 in the hospital versus $571 in a surgery center -
a difference of $320 less per claim. A separate but
similar study published by the Journal of Health Care
Compliance in 2005 found that payments for procedures
in hospital outpatient department and ambulatory
surgery centers indicate that for the same surgical
services, the hospital is reimbursed significantly
more resulting in an estimated $1.1 billion in
additional Medicare payments. After payment rate
comparisons of 424 different procedure codes in '05,
it was found that 66 percent for 279 of those
procedures reimbursed more in the hospital compared to
a surgery center. For these 279 procedure codes, the
median difference was $282.
MR. HAYES continued:
Competition brings lower prices, more convenience,
better quality, and new technology and innovations.
Hospitals with CON protection have a franchise
monopoly, which provides no incentive for it to
exercise cost control or better services. The owners
of these existing facilities can charge inflated
prices for their services, which continue to raise
costs by restricting the entry of more cost effective
providers into the market. Multi-state econometric
studies demonstrated no significant lower cost with
CON and the repeal of CON had no significant
subsequent effect on hospital costs. In fact,
hospitals in states with CON regulation have costs
that are approximately 20.6 percent higher than non-
CON states. Hospitals in more competitive markets
have demonstrated to have average costs below those
who have competitive markets. Healthy competition
appears to work in giving economic power to the
patients and payers by creating choices for consumers
and raising quality standards as providers compete for
patient loyalty.
Alaska's certificate of need department regulates the
most services equipment and facilities of any state in
the country. Interestingly, state health care data
from the Kaiser [Family] Foundation also shows Alaska
to be the most expensive in the country for outpatient
care. So, I don't think it's coincidence that Alaska
is the most regulated CON state in the country and
just happens to also be the most expensive in the
country. Additionally, our number one ranking cannot
simply be attributed to the high cost of living as
Hawaii ranks 28 in hospital care expense but is number
four in cost of living. Alaska's not even in the top
10 for cost of living, but remains the most expensive
health care services in the country. In contrast,
Alaska spent only 8.3 of its general fund on Medicaid,
with only five states in the Union spending less.
Therefore, high health care costs are not a result of
high indigent or charity care spending by the state as
the hospitals have argued. Although the cost of
services remains high in the state of Alaska, the CON
department has created a substantial impediment to
healthy competition. And, in effect, represents a
state government supported department of anti-trade
and hospital monopolies that keeps health care prices
high. These high health care costs support the thesis
that Alaska's CON department contributes to increased
patient expenses.
MR. HAYES continued:
The CON's chief goal is to reduce health care costs,
something the numbers tell us it has been horrific in
accomplishing. There has been no evidence that CON
regulations lower the cost of health care in Alaska,
but significant data from respected agencies showing
we're the most expensive in the country. A fact,
which alone should be sufficient reason to repeal a
law specifically designed to control costs. This
bill, if passed, would have tremendous economic effect
on the residents of Alaska in the form of huge health
care savings. We feel with time Alaskans are given an
answer to their quest for affordable medical care.
In conclusion, I just would like to leave you guys
with some additional statistics from the 2005 Henry J.
Kaiser [Family] Foundation study on Alaska's current
health care environment. Number one, in 2003 Alaska
ranks number one in the U.S. in average expenses per
inpatient day at $1,952. In comparison, Hawaii ranks
28. In 2004 Alaska ranks 45th in total Medicaid
spending, confirming that the majority of the states
in this country spend more indigent and charity care.
In 2003 Alaska spent 8.3 percent of the state general
fund expenditures on Medicaid. Only five states in
the U.S. spent less. Currently, Alaska's hospital
care is the highest as compared with any other state,
with the exception of the District of Columbia.
4:06:09 PM
MR. HAYES, in response to comments that service centers would
not be open 24 hours 7 days a week, pointed out that emergency
rooms care for patients requiring acute care and emergency
services. However, surgery centers perform outpatient services
and perform procedures that aren't life and death procedures and
thus there wouldn't be a need for a surgery center to be open 24
hours a day. There is a difference between emergency rooms and
ambulatory surgery centers, he said. With regard to Mr. Powers'
testimony that only one pain management physician is necessary
in the Fairbanks area, Mr. Hayes pointed out that the Fairbanks
area already supports five pain management physicians. The
hospital doesn't support more than one. Furthermore, the four
pain management physicians not allowed to see patients at the
hospital in Fairbanks are fellowship trained and double board
certified, which is the case for the hospital pain staff.
4:07:43 PM
REPRESENTATIVE GATTO agreed that eliminating the CON would
reduce prices, but he questioned whether the state wants to have
a few years of cheaper costs and lose the hospital. He opined
that of most concern are hospitals such as Bartlett Regional
Hospital, which is located in an area where there is no other
alternative for that kind of care.
MR. HAYES pointed out that the physicians who want to compete
with hospitals for some services have a vested interest in
keeping the hospital running because most physicians who work
outside of the hospital also work for the hospital and provide
inpatient care at the hospital. He opined that Fairbanks
Memorial Hospital, with its $100 million in the bank, can afford
to have some healthy competition. Perhaps such would increase
the efficiency of services and increase the level of technology
and innovation.
4:10:55 PM
CHARLIE FRANZ, CEO, South Peninsula Hospital, recalled the
sponsor saying that free market forces should be allowed to work
in health care and repeal the CON law. Mr. Franz disagreed and
pointed out that health care is not in a free market as it's
highly regulated and very different than other businesses. He
asked the committee to think of another business or profession
in which someone else decides how much one will be paid for the
service provided. With regard to the testimony that specialty
facilities can provide services at a lower cost than hospitals,
Mr. Franz agreed. However, he pointed out that specialty
facilities target the most lucrative services provided by
hospitals, such as imaging or surgery. The aforementioned are
major profit centers, which help hospitals offset the cost of
providing unprofitable services 24 hours a day 365 days a year
to anyone. "Community hospitals serve the community, specialty
facilities are businesses," he said. Last year the CON law was
changed by adding clarity and new requirements in order to
qualify to add a service, build a new facility, or make major
changes. Those new rules should be allowed to operate for a
period of time in order to determine whether it creates a better
situation. Nothing in the current CON statute or regulation
prevents anyone from submitting a CON application and
demonstrating the need for services or the ability to provide
those services in a more cost-effective manner. Therefore, Mr.
Franz asked the committee to do what is right and maintain the
current CON law.
4:14:58 PM
JOHN BRINGHURST, CEO, Petersburg Medical Center, began by
relating his opposition to HB 287. He noted that his testimony
is based primarily on his experience in joint ventures with a
physician center in another area. He expressed concern that
specialty facilities hurt existing providers who provide 24-hour
service in a community. Furthermore, Mr. Bringhurst related his
belief that the specialty facilities may increase the overall
cost of health care. Also, there is a disproportionate share of
uninsured and underinsured patients who are treated by
[specialty] facilities. The aforementioned increases the
average cost of care for existing providers, he opined.
Moreover, [specialty] facilities take patients with less
critical needs, and thus leave fewer cases for existing
providers as well as cases with a higher average cost. Mr.
Bringhurst then related his experience that surgery centers have
increased the number of procedures performed in a community.
Although there is evidence that rates can be lower in an
outpatient surgery center, there's also evidence that the number
of cases treated increases. He recalled that within a short
period of time the surgery center with which he was involved
began to see 40 patients a week. However, the hospital only
suffered 15-20 cases per week of a loss and thus he questioned
from where the other 20-25 cases came. Mr. Bringhurst opined
that when a physician has a larger financial interest at stake,
sometimes the physician's objectivity in referring patients can
be challenged. In such situations, the patients lose.
Therefore, Mr. Bringhurst urged defeat of HB 287.
4:18:03 PM
ELIZABETH RIPLEY, Director, Marketing and Public Relations, Mat-
Su Regional Medical Center, stated opposition to HB 287. Ms.
Ripley opined that the current CON isn't preventing growth in
Alaska's health care infrastructure as Mat-Su Regional Medical
Center is the newest and most modern medical facility in the
state. Ms. Ripley acknowledged the benefits of fair
competition, but highlighted that [hospitals] are legally and
ethically bound to serve all patients, regardless of the
patient's ability to pay. Ms. Ripley said that there are
documented decreases related to free-standing imaging centers in
the Mat-Su area. She clarified that Mat-Su Regional Medical
Center is a private business that doesn't receive assistance
from the Mat-Su Borough government, which has limited health
care powers as a second class borough. She noted that the Mat-
Su Regional Medical Center directly competes with the Anchorage
providers. Ms. Ripley concluded by reiterating the need to
allow the CON modifications passed last year a chance to work
for evaluation.
4:21:47 PM
REPRESENTATIVE GATTO, recalling that the cost of the Mat-Su
Regional Medical Center was $101 million, asked if it was more
expensive to build the hospital with the CON in place than it
would've been had the CON been repealed.
MS. RIPLEY said that she didn't believe there would be a
difference, although she acknowledged that there was a cost to
move through the CON process.
4:22:44 PM
REPRESENTATIVE GATTO noted that an imaging center is being built
close to Mat-Su Regional Medical Center. He surmised that the
imaging center will cause the hospital to lower its rates for
imaging.
MS. RIPLEY began by commenting that this new hospital will help
all the hospitals in the area perform at a higher level and
provide better care. She related her belief that there are loop
holes in the current CON law, and thus there is still concern
that there isn't a level playing field. In further response to
Representative Gatto, the imaging center, to the Ms. Ripley's
understanding, didn't go through the CON process. Therefore,
Mat-Su Regional Medical Center has petitioned the state to
investigate the matter and determine whether a CON is necessary.
This determination should be forthcoming. This is an example of
how hospitals that are very familiar with the CON laws find ways
in which to capitalize on the lucrative areas of health care.
REPRESENTATIVE GATTO inquired as to what happens if the imaging
facility, currently being constructed, doesn't obtain a CON.
MS. RIPLEY answered that construction would have to cease and
desist.
4:25:40 PM
PAUL FUHS, Lobbyist, Alaskans for Medical Choice and
Competition, stated support for HB 287. He informed the
committee that he is also the sponsor of an initiative that
would [eliminate the CON]. He noted that originally the
initiative was filed as HB 287 because hospitals in large
communities can afford competition. He acknowledged that the
smaller hospitals [in smaller areas] can't afford competition,
which is why HB 287 only applies to communities with populations
over 25,000 and facilities that aren't designated as a critical
access hospital. Mr. Fuhs surmised from much of the testimony
that the hospitals believe that they are the only ones that
should be able to supply services and that the CON is holding
costs down. However, if that's the case, why does Alaska have a
crisis in every aspect of health care, he asked.
MR. FUHS then referred the committee to what he considered to be
the best source of data: the U.S. Department of Justice and the
Anti-Trust Division of the Federal Trade Commission (FTC). The
FTC published a study of CON last July that showed in states
without CON health costs are 20 percent lower. With regard to
the General Motors Daimler Benz (ph) Study that was mentioned
earlier, the Michigan Department of Health has completely
debunked that study. Mr. Fuhs then related that he was a
consumer representative on the first state health board meeting
[on CON] back in the 1970s. In those days, a statewide system
of reporting financial and other operating data as well as a
current health plan for the state was required. At this point,
the department is deficient in the aforementioned areas. He
indicated that the aforementioned is partially due to the fact
that there is only one employee who deals with CONs, which is in
stark contrast to the 25 employees who performed the work when
it was "a real program." The data is not being collected to
provide the information. He then drew attention to charts
provided to the committee that relate nationwide data that
specify health care price increases across the country and which
sectors are responsible. Hospitals, the most protected by CONS,
are 53 percent of the cost increases in the country. The
aforementioned data isn't available for Alaska. Moreover, he
related that when he contacted the Division of Workers'
Compensation within the Department of Labor & Workforce
Development (DLWD) to obtain some of the data it collects, he
was told that it was proprietary information since the
department contracts with a company to gather the data.
Therefore, he questioned what's going on with the aforementioned
since workers' compensation is a public program. Without any
data or oversight, decisions are being made on a political
basis, he opined. The aforementioned isn't a good way to make
decisions for health care.
MR. FUHS agreed that the state does allow the creation of
monopolies such as with phone service. However, he pointed out
that with such monopolies there are regulated rates, which isn't
the case with hospitals. Mr. Fuhs recalled hearings on the CON
regulations last year when he discovered that cost isn't one of
the criteria for granting a CON. Furthermore, quality isn't a
criteria for judging a CON application. Therefore, he
questioned upon what the CON bases its decisions. He then
suggested that hospitals should be able to illustrate through
financial data that they are losing money [without the CON]. He
said that he has a financial report on Fairbanks Memorial
Hospital and Providence Hospital, which presents that Fairbanks
Memorial Hospital made $11 million in profits and has $214
million in the bank while Providence Hospital, as a nonprofit,
made $23 million in profit last year.
MR. FUHS then turned the committee's attention to the $28
million fiscal note on HB 287, which the sponsor has challenged
the department to justify. However, the department has yet to
do so. He drew attention to information that related that
independent ambulatory surgical centers cost the patient less
than a hospital. If the committee does take action on HB 287,
Mr. Fuhs urged the committee to address the fiscal note, which
he said is too high.
4:35:45 PM
REPRESENTATIVE GATTO pointed out that the $214 million that Mr.
Fuhs said Fairbanks Memorial Hospital has in the bank refers to
the hospital's net assets or fund balances at the end of the
year. Therefore, the $214 million seems to refer to the total
sum of Fairbanks Memorial Hospital's assets.
MR. FUHS replied no, and related his understanding that the $214
million is the money, stocks, and bonds of Fairbanks Memorial
Hospital not the hospital's physical assets.
CHAIR WILSON related her understanding that the [Fairbanks
Memorial Hospital] foundation is separate from the hospital and
it raises funds. Therefore, she opined that the foundation
funds couldn't be included in the hospital's profits.
MR. FUHS specified that he has seen tax years in which
[Fairbanks Memorial Hospital has earned a profit] of $20
million, which is then placed into the foundation. He disagreed
with the notion that the foundation is raising funds for the
hospital because when the hospital added a $120 million
addition, the hospital obtained financing from the Alaska
Industrial Development and Export Authority (AIDEA). In
response to Representative Gatto, he suggested that the hospital
probably owes most of that recent funding from AIDEA. If the
hospital is taking funds from what it charges patients to pay
the loan and maintains $11 million in the foundation, the
foundation isn't being used rather it's building the foundation.
4:39:45 PM
REPRESENTATIVE GATTO asked if the amount the hospital is paying
back would be a deduction and the hospital would still have an
$11 million profit.
MR. FUHS answered that it's after all payments have been made.
He offered to provide the committee with the financial records
for a representative year.
4:41:23 PM
MR. FUHS, in response to Representative Gardner regarding
whether there are other stakeholders than medical personnel,
specified that Alaskans For Medical Choice and Competition are
behind this effort and the organization consists of consumers,
small businesses, individuals, nurses, and physicians.
4:41:54 PM
REPRESENTATIVE GATTO asked if there is an organization on the
other side of this issue as he expressed interest in the belief
of consumers.
MR. FUHS said that's why he tried to provide the committee with
data regarding the impact to the consumer.
4:43:03 PM
LAURIE HERMAN, Regional Director, Government Affairs, Providence
Health & Services - Alaska, provided the following testimony
[original punctuation provided]:
Providence does not believe that this piece of
legislation should be enacted into law. In 2004 the
legislature made significant changes to state law
governing this program. And during the legislative
debate there was a message heard loud and clear that
the legislature felt that the regulations surrounding
CON needed review and revision where appropriate. As
a result, the department embarked upon a lengthy
public process and in fact, updated those regulations
and they were completed in December of last year and
they've been in effect since January of this year.
And we believe that we need to give these new
regulations a chance to work. Let's see if things are
better as a result of this latest effort. As you've
heard today several times, health care does not fit
the free market enterprise mold. Gratefully, our
society stipulates that no one will be denied medical
care due to the lack of financial resources. Only
certain facilities, primarily hospitals, are subject
to a federal mandate that all patients will be seen
regardless of the ability to pay. As a result,
hospitals have essentially become insurance for the
uninsured. Care to the poor and vulnerable is a very
important piece of the Providence mission and we
provide these services willingly every day. Last year
alone, we provided over $30 million in charity care
and an additional $40 million was written off in bad
debt. Important revenue streams that are used to
underwrite unprofitable services like our emergency
departments -- the place where the poor and vulnerable
go for care -- are provided by high margin services
that are attractive for those who do not use the
profits to ensure the survival for critical care in
our communities. They can easily under price and
still collect windfall profits, given that they are
not mandated to see all patients nor do they provide a
full spectrum of care 24 hours a day, 365 days a year.
What does their delivery model do for the uninsured
mother who needs care?
In Alaska we have a strong system of nonprofit
hospitals that offset their losses in charitable care
and bad debt through profitable services like
ambulatory surgery and imaging. Without a CON
program, more niche providers will likely open service
boutiques to provide only these specific services.
When niche providers skim the profitable business from
local community hospitals, hospitals can't offset the
expense of charitable care, bad debt, or emergency
room cases. Remember, this is mandated care we're
talking about -- care for those who lack the ability
to pay. If hospitals fail and emergency rooms close,
this is the population that will have nowhere to turn
for medical care. Certificate of need is not about
government control of health care, it is about
providing a process for communities to have a say in
the evolution of the health care systems that they've
financed and that are an essential component of the
infrastructure in their community. Whether in a large
community or small, hospitals must have profitable
service lines in order to offer the full range of
services a community needs. If niche providers are
allowed to come into an area without demonstrating
that there's a need and primarily serve the high pay,
low risk population, community-based hospitals could
be at risk of failing. Those who cannot pay for care
are then left without treatment options. I urge
committee members not to move this bill forward.
4:48:13 PM
MS. HERMAN then acknowledged that in 2005 Providence did have a
significant amount of net income and every penny stays in the
state. In fact, over 2005-2007 Providence is putting $100
million into medical facilities in Anchorage. Additionally,
Providence spends about $30 million a year on infrastructure and
information technology upgrades.
REPRESENTATIVE GATTO turned to the facility Providence is
building in Palmer that doesn't have a CON.
MS. HERMAN specified that a medical office building is being
built in Palmer, which will be leased to a physician practice.
She said that medical office buildings don't require a CON.
REPRESENTATIVE GATTO asked if the Palmer facility is an imaging
center.
MS. HERMAN reiterated that it's a physician practice. She
related her understanding that one of the physicians involved is
a radiologist. She offered to have the physicians in that
practice talk with the committee regarding the nature of the
practice.
4:51:10 PM
ROD BETIT, President, Alaska State Hospital and Nursing Home
Association (ASHNHA), began by clarifying that testimony that
all physicians in Juneau oppose [eliminating] the CON isn't the
case. Regarding transparency of medical data, Mr. Betit said
that ASHNHA would like to have better medical data analysis. In
fact, Mr. Betit noted that he sits on a task force created by
the legislature to review the following: workers' compensation,
why costs are higher, and how much of the costs are related to
medical care versus the kinds of injuries and rehabilitation
utilized. For a year, such information has been requested and
it's still not available. The aforementioned is part of the
reason Senator Seekins requested an extension of the task force.
Therefore, it's premature, he opined, to draw conclusions with
regard to why costs are increasing in areas such as workers'
compensation.
MR. BETIT then recalled testimony that Medicaid only makes up
8.3 percent of the general fund and the state doesn't spend
enough. Drawing on his prior experience as Medicaid director in
Alaska, all states spend far too much on Medicaid. Alaska has
had an almost 60 percent federal match rate whereas other states
have had 50 percent. Furthermore, a large number of those
eligible for Medicaid are Alaska Natives and those who use a
Indian health service facility or tribal program are reimbursed
100 percent by the federal government. Therefore, he opined
that it's not a good indicator as to whether too little or too
much is being spent on the Medicaid population.
MR. BETIT, speaking to the document he provided the committee,
said there are seven key themes regarding whether the CON is a
good or bad program. He specified the following: health care
isn't a conventional market; CON is an important health policy
tool that balances community need with growth; the lack of a
federal mandate for CON doesn't mean such laws are unnecessary.
In fact, when the federal government left the CON in the hands
of the state government, it was a political decision based on
the belief that states should marshal the health care
environment in the state. Therefore, he didn't interpret the
absence of the federal government as an indication that it
doesn't support CON.
MR. BETIT, regarding whether CON is preventing growth, related
that since the CON regulations were finalized and the CON
application process reopened, there has been a flurry of
activity. Although ASHNHA members aren't particularly excited
about some of the decisions, it's an environment in which
rational and fair decisions are being applied. Furthermore,
there is an appeal process for those who don't believe a fair
process occurred. He then provided the committee with a
sampling of applications that have come before the department.
The process attempts to balance the needs in the community with
the projects that come forward, he said. Regarding whether CON
is a good health tool or not, Mr. Betit opined that the health
care system in a geographic area can be built up and not provide
what is truly needed, create over supply, and lead to some
critical damage to a health care system. He recalled his time
in Utah as a state health director when Utah had lifted the CON
in some areas. Immediately following, eight psychiatric
facilities were built, all of which disappeared over the course
of the next three years. During this time, the long-term care
system in Utah had 25 percent vacancy rate and 20 out of 100
facilities were in some kind of financial distress. The
aforementioned led to an emergency rule forbidding any more
building of Medicaid beds in Utah without approval from the
department. The aforementioned moratorium remains today. Mr.
Betit opined that there is ample evidence that if health policy
and planning isn't approached in a very deliberative manner,
very significant unintended consequences can result. Therefore,
if HB 287 moves forward he suggested that it will have results
similar to those in Utah.
5:02:36 PM
REPRESENTATIVE KOHRING interpreted empty facilities as the
result of a market process caused by facilities not providing
services the public wants. Deciding whether facilities should
be built or not isn't the government's role, he opined.
MR. BETIT noted his strong disagreement. He explained that the
reason for the vacancies didn't have to do with whether someone
wanted to be in a nursing home. He reminded the committee that
most of the nursing home business is funded by Medicaid with
only about 25 percent of the nursing home population being
privately funded because people can't afford it and don't have
insurance for it. Ultimately, people lose enough assets and
income to qualify for Medicaid. He explained the differences in
this market. He recalled that when Utah [eliminated its CON in
certain areas] there was a 300 percent increase in confirmed
patient harm and complaints during the period of escalation of
vacant beds, the state was paying the same amount per day for
nursing home beds that it paid before the new beds were built,
and operators were forced to fund overhead and basic expenses
and thus didn't meet the need of patients. Therefore, the
moratorium in Utah changed that. However, that change occurred
because the state stepped in since the market doesn't have such
a correcting ability.
5:06:10 PM
CHAIR WILSON pointed out that the testimony on this issue has
brought forth much contradictory information that requires
further inquiry. Therefore, she announced that HB 287 would be
held.
5:09:53 PM
REPRESENTATIVE CISSNA noted that she made a copy of the
Institute of Social and Economic Research (ISER) report
regarding the cost of health care for the committee's review.
The report essentially says, "But for now we want to emphasize
that the answer to what is driving health care costs is not
simple and finding solutions won't be simple either."
Additionally, Common Wealth North's study provided a number of
recommendations, of which none touched CON. Representative
Cissna stressed her belief that this is a matter for which the
state is responsible.
5:11:32 PM
CHAIR WILSON announced that although the [House] isn't [placing
any House Bills on the floor calendar], the committee will
continue to hear legislation that address health care costs in
the state.
5:12:30 PM
ADJOURNMENT
There being no further business before the committee, the House
Health, Education and Social Services Standing Committee meeting
was adjourned at 5:12 p.m.
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