Hospital Conversions Act hearing reveals policy chasm

PROVIDENCE – The Senate committee on Health and Human Services held a two-and-a-half-hour hearing on Wednesday to listen to public testimony on the amended version of Senate Bill No. 2180 – the Hospital Conversions Act.

The bill would make substantial changes regarding the manner Rhode Island’s nonprofit hospital systems can be purchased in the future.

On the surface of the hearing were changes sought by Steward Health Care that would enable the Boston-based hospital system to buy nonprofit hospitals in Rhode Island without having to wait the three years required under current law between purchases.

The language of the proposed bill made visible the fault lines in current debates regarding future health care policy and the role that government should play.

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Since its initial purchase of six hospitals in November 2010, Steward – owned by a private equity firm Cerberus Capital Managementin New York City – has been aggressively expanding its hospital system, buying four more hospitals in Massachusetts during the last two years.

Steward’s application to purchase Landmark Medical Center in Woonsocket is being reviewed by regulators at the R.I. Department of Health and the R.I. Attorney General’s office. On the day of the hearing, Steward announced that it was acquiring New England Sinai Hospital in Stoughton, Mass., a 212-bed long-term acute-care facility.

Much of the work to create the amended version of the proposed legislation was already accomplished behind closed doors in meetings between Senate policy staff and lobbyists, tweaking the language.

In addition to the changes sought by Steward, language has been added to the legislation to enable nonprofit hospitals to purchase other nonprofit hospitals in Rhode Island that were determined to be “financially distressed.”

Kenneth H. Belcher, president and CEO of CharterCARE Health Partners, which has been actively seeking a partner for its hospital operations, testified in favor of this.

New language had also added certain conditions that “may” be required by state regulators as part of any hospital sale. There was discussion at the hearing whether the “may” should be changed to “shall,” so that the conditions would be enforceable.

Among those testifying were Lifespan, Care New England, Blue Cross & Blue Shield of Rhode Island, the office of Lt. Gov. Elizabeth H. Roberts, and Steward Health Care. Their comments, often shortened versions of what was presented to the committee in detailed letters – revealed deep divisions.

For instance, in his testimony, Robert D. Goldberg, one of three lobbyists hired by Steward Health Care, expressed disdain for the current nonprofit hospital systems in Rhode Island.

“The only true difference between a for-profit [hospital system] and a nonprofit is that a for-profit pays taxes,” Goldberg claimed. Sen. Joshua Miller, D-Cranston, challenged Goldberg’s assertion, asking whether a for-profit’s obligation to shareholder’s was also an important difference.

Goldberg briefly acknowledged that Miller was correct, but then changed the subject, launching an attack on Lifespan, claiming that it was “sucking up” all the community hospitals.

After the hearing, Miller said: “I think one of the things that is being missed in the discussion [of for-profit versus nonprofit] is that we’re not talking about trying to lure Toyota to Rhode Island trying to make cars. This is about health care. For people to dismiss scrutiny as you should just let the enterprise control the situation is probably the wrong context of what we’re talking about.”

Goldberg did offer three amendments to the bill on behalf of Steward, as well as his own expertise to the committee, saying he could be found almost every day at the Statehouse and would be happy to help in efforts to tweak the legislation.

“In all my years working in the Statehouse, this is one of the biggest, most complex issues I’ve ever been involved with,” he said

In her testimony, Monica Neronha, vice president of legal services at Blue Cross, countered Goldberg’s assertion about “taxes” being the only difference, pointing out that the General Assembly in 2010 created an exemption for the purchaser of Landmark from paying sales and use tax for purchases, capital improvements and other expenditures necessary to maintain the hospital.

Neronha expressed concern that the legislation, as written, allowed for additional nonprofit hospitals to change hands without factoring the necessary time to develop a data-driven, statewide health care plan now underway.

Both Christopher Callaci, general counsel for United Nurses & Allied Professionals – the union representing about 600 workers at Landmark and its sister facility, the Rehabilitation Hospital of Rhode Island – and Matt Wojcik, Woonsocket’s economic development coordinator, testified in favor of the legislation.

Callaci added Memorial Hospital in Pawtucket to the growing list of community hospitals struggling to keep its head above water.

David A. Balasco, director of government relations at Lifespan, followed, saying that the proposed bill had nothing to do with the pending sale of Landmark – it was addressing what would happen after.

The proposed legislation is expected to go through another round of rewrites.

Just how quickly Rhode Island’s health care playing field is changing was made evident when Edward J. Quinlan, president of the Hospital Association of Rhode Island, showed a reporter the news on his mobile device – The North Stonington Health Center, a facility owned by Westerly Hospital, which is in receivership, may be bought by NS Healthcare Holdco, LLC, owners of three hospitals in New Jersey.

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