The work of the Commission to Study Maine’s Hospitals, under fire a year ago when its chairman suggested merging facilities and laying off staff, has resulted in legislation so tame it will have almost no effect on health-care costs going forward.
It was so watered down, in fact, the commission’s chairman, Bill Haggett, former chief executive officer of Bath Iron Works, said, “I didn’t want to have my name on it.”
Haggett made headlines last year when he proposed laying off 3,500 hospital employees statewide; closing a hospital in Brunswick and one in Waterville; and forcing regionalization around the state’s top three medical centers – Maine Health in Portland, Eastern Maine Healthcare in Bangor and Central Maine Healthcare in Lewiston.
While those proposals were deemed too controversial almost from the beginning, few expected the final legislation to be so gutted it would pass without even a roll call.
The bill, “An Act to Implement Certain Recommendations of the Commission to Study Maine’s Community Hospitals,” was written by the governor’s Office of Health Policy and Finance. It calls for hospitals to continue their voluntary cap on cost and profit increases; asks them to use a shared template when submitting financial information to the state; and, sets up another committee to study hospital and insurance billing procedures.
“My first request is that you change the title of this bill,” Haggett told the Health and Human Services Committee, prior to the bill’s passage in the Legislature last month. “It should read ‘An Act to Implement a Few Recommendations of the Commission to Study Maine’s Hospitals,’ with major modifications to the commission’s language and intent.”
While Haggett was the lightening rod on the commission, he was not alone in his disappointment with the legislative results of its work.
The administration “caved,” said Christopher St. John of the progressive Maine Center for Economic Policy, about Gov. John Baldacci and his staff regarding the hospital bill. St. John, who sat on the commission, personally would like to go back to the days of the Maine Health Care Finance Commission, when the state regulated hospital costs.
“I did not regard the final report as very earth shattering,” St. John said, and the legislation that came out of it was even less so. He credited the hospital lobby, saying “they were successful and aggressive in their marketing campaign.”
Steven Michaud, president of the Maine Hospital Association, was happy to take the credit, but said the administration and the commission caused their own defeat.
“What the Haggetts and the St. Johns and the administration did was allow it to happen,” Michaud said of the toothless bill. “Their own extremist agenda made lobbying against it easy.”
Perhaps the crowing glory in the hospitals’ campaign was an article in last December’s Down East magazine, accompanied by a chart showing “Xs” over all the state’s hospitals except the big three.
“There are no recommendations and never were any that would have closed small, remote hospitals in Maine,” Haggett said.
But that didn’t prevent the public from believing their local hospitals were in danger, and that, in turn, put pressure on legislators.
“I didn’t realize that the legislators themselves were drawn into these debates, and they were adamant supporters of the hospitals in their own area,” Haggett said. “It became obvious there was no real political will to deal with the tough issues.”
Recommendations ignored
Those “tough issues” include state findings that showed hospital costs in Maine were higher than the national average and even higher than nearby Massachusetts. The hospital commission also cited a survey where insurance companies said they pay 31 percent more per hospital stay in Maine than they do in Massachusetts and New Hampshire.
While hospitals refute many of the profit and cost claims, few disagree that because of Maine’s low-income status, health care costs are rising faster than people can afford. A statistic often used by the administration is that from 1996-2002, the cost of a family insurance policy in Maine went up 77 percent while median household income increased by only 6 percent.
With hospital bills making up roughly one-third of those costs, the study commission recommended 20 proposals, including:
• a Consortium for Hospital Collaboration – made of hospital and state representatives – to encourage cutting administrative costs, bulk purchasing, and standardizing treatment
• giving licensing priority to those projects suggested by the consortium and possibly financial incentives to encourage hospital collaboration
• floating a state bond to help launch a statewide system of electronic medical records accessed by anyone treating a patient
• revising insurance rules to allow patients to go beyond their immediate coverage area to shop for the best quality and cheapest health care
• imposing a snack tax to pay for hospitals to run wellness or preventive care programs
• requiring hospitals publish the compensation packages for their five highest-paid executives
• the continuation of voluntary profit caps and the standard financial reporting that were approved in the final legislation
• on-time payments by the state to the hospitals for the service they provide Medicaid patients.
On that final point, which was not addressed in the bill, Michaud of the MHA said the growing amount of money the state owes its hospitals for Medicaid is “the biggest story facing health care in Maine.” By June of 2007, he said, “the state will owe us over $300 million…and this state doesn’t have the money.”
Paying for change
While it’s tough to keep track just how much the state owes in Medicaid payments to hospitals because the bill gets bigger every day, all agree the state is behind despite efforts to catch up.
Sen. Peter Mills, R-Somerset, who introduced legislation calling for more timely payments, said “the (state) Medicaid budget is only in balance today because we delayed paying hospitals.”
Mills, who still hasn’t made up his mind whether he’s running for governor, said, “The unannounced policy of this administration is there’s no harm in borrowing money from them and there’s no harm in continuing to underpay them until we see them come into line,” with cost cutting measures.
He believes the hospitals should be paid what they’re owed, but, in return should be doing more in terms of public health and prevention initiatives – school-based health clinics, for example.
“There’s a certain strength in recognizing there’s a monolithic institution in charge of each region,” he said of the hospitals. “We as a state should be asking, ‘can’t you do more than what you’re doing and how can we make it worth your while?'”
St. John agreed the state’s late Medicaid payments are affecting the debate over controlling costs, because it makes the state and the idea of more state regulations look bad.
“Until hospitals are paid in a timely way for services provided, it will be hard politically to push further reforms of how the hospitals do business,” he said.
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