Malloy destroys Connecticut’s regional hospitals, Jepsen and Democrats fail to act

While national attention has focused on the Malloy administration’s inappropriate relationship with the insurance industry and the merger of CIGNA and Anthem, few in Connecticut are fully aware that Malloy’s disastrous budget and regulatory policies are leading to the demise of Connecticut’s historic system of regional hospitals and hospitals that are owned and operated by nonprofit entities based in Connecticut.

From The Journal Inquirer, via the Hartford Business Journal, comes more news about the destruction of Connecticut.  In ECHN sale gets final OK; State officials expect end of July completion (6/13/2016) and State gives conditional OK to Waterbury Hospital sale (6/26/16), Connecticut citizens have the opportunity to learn more about the repercussions of Malloy’s unprecedented attacks on Connecticut’s once great system of regional hospitals that were dedicated to the health of the citizens and communities in which they served.

Instead of protecting these important community and health assets, Governor Malloy and his administration – with the support of the Connecticut legislature – have undermined Connecticut’s hospitals and set up a system in which these vital institutions are being turned over to out-of-state, for-profit entities that see Connecticut’s citizens as simply an opportunity to make a buck at the expense of our health and our communities.

Few, except for the Connecticut Citizen Action Group (CCAG), have been stepping up to fight Malloy’s destructive policies.  Among those dedicated to the “get-along-to-go-along” approach to politics and governance has been Attorney General George Jepsen who should have been fighting Malloy on his outrageous anti-local hospital policies.

The problem has been taking shape for the past few years,

See Wait, What? articles;

Governor Dannel Malloy – On a Mission to destroy Connecticut’s hospitals (12/14/15)

WARNING: The assault on Connecticut’s Hospitals – Here come the for-profit hospital operators  (7/11/15)

Malloy must take responsibility for many of the these hospital layoffs (6/6/14)

But news that the State of Connecticut had given final approval to the destruction of Eastern Connecticut Health Network (ECHN), including Rockville and Manchester hospitals, came earlier this month and now comes the reporting on the state’s approval of the plan to undermine healthcare in the greater Waterbury area.

In ECHN sale gets final OK; State officials expect end of July completion, the JI wrote;

State regulators have decided not to require an independent ombudsman as a condition for approving the $105 million sale of Eastern Connecticut Health Network to a California for-profit company.

That was the only major change announced Friday in the final decision by the state Office of Health Care Access and Attorney General George Jepsen ratifying ECHN’s purchase by Prospect Medical Holdings Inc.

The ombudsman had been one of the most important conditions for many area residents.

State regulators agreed instead to allow for two new members selected from the community, with full voting privileges, to sit on an oversight board that includes local doctors, health care workers, and ECHN managers.

State officials expect the sale to be finalized by the end of July, when ECHN would become known as Prospect ECHN Inc.

[…]

During two days of public hearings last month in both Manchester and Vernon, residents called for appointment of an independent ombudsman to an oversight committee to ensure the communities’ interests are served.

OHCA included that request in the draft decision, but the wording was changed in the final decision released Friday.

Rather than an ex-officio, non-voting member, the two new “community representatives” will have voting privileges and be selected in consultation with the mayors of both Manchester and Vernon.

[…]

Prospect plans to implement its “Coordinated Regional Care” model here, using a preferred provider network focused on preventive care and early readmission to reduce emergency visits.

Prospect officials said Friday afternoon that they were still reviewing the final decision and had no immediate comment. Nevertheless, they said, they hope to finalize the sale soon.

The private company owns 13 hospitals, including seven in California, four in Texas, and two in Rhode Island. It also plans to buy Waterbury Hospital as well as acute-care facilities in New Jersey and Pennsylvania.

In California, where Prospect is headquartered, that state’s patient advocate has rated many of its programs and services as “poor.”

In addition, two of its southern California hospitals in Los Angeles and Culver City are facing federal sanctions because of an “immediate jeopardy” status for unsanitary conditions that caused a surgery to be closed for eight days in order to be properly cleaned and pass inspection.

The company is also facing a labor battle with its nurses and other health care workers in Rhode Island, where contracts are about to expire.

Meanwhile, yesterday the JI covered the situation in Waterbury in an article entitled, State gives conditional OK to Waterbury Hospital sale included;

State regulators Friday issued conditional approval of the sale of Greater Waterbury Health Network and Waterbury Hospital to Prospect Medical Holdings, Inc. for $100 million.

The state Public Health Department’s Office of Health Care Access, or OHCA, and the state attorney general’s office late Friday both released their proposed final decisions to approve the health network’s Certificate of Need application, issuing several conditions.

Conditions that California-based Prospect must meet include: reporting to state regulators any changes to patient care or services in the next three years; submitting a health and community needs assessment plan; maintaining current charity and indigent care; hold a semi-annual joint meeting of the board of directors that’s open to the public; designate a voting board member position for a community representative appointed by the mayor; submit a three-year service plan for any consolidation, reduction, or elimination of services; and submit a semi-annual report to state regulators showing how funds are spent on capital improvements.

[…]

For-profit Prospect Medical is also in the process of purchasing nonprofit Eastern Connecticut Health Network, including Manchester Memorial and Rockville General hospitals, for $105 million, with plans to spend $75 million in capital improvements on those facilities over the next five years.

Prospect now owns 13 hospitals in California, Texas, and Rhode Island. It is also seeking to purchase acute care facilities in New Jersey and Pennsylvania.

And where are Connecticut’s elected officials?

They remain, silent.

Governor Dannel Malloy – On a Mission to destroy Connecticut’s hospitals

The story behind the story…

September 2015:  Less than two months after signing into law a new state budget that raised taxes and cut spending, a state budget that Governor Dannel Malloy claimed was balanced and would maintain the state’s vital services, came the news that a massive budget deficit was opening up for this fiscal year and would be even bigger in the next fiscal year.

In response, Governor Malloy announced a series of emergency budget cuts, the largest aimed at Connecticut’s hospital.  Malloy proposed cutting reimbursements to hospitals by another $240 million over the two year period.

The state funding is provided to help hospitals pay for the care they provide to poor and uninsured patients, including those who use the federal government’s Medicaid program.

In response, the Connecticut Hospital Association wrote;

“We are outraged that the Governor would slash Medicaid funding that is desperately needed to care for the most vulnerable people in our state.  With nearly one in five Connecticut residents on Medicaid, withdrawing even more funding from the state’s obligation is outrageous.  It puts a tremendous additional strain on healthcare providers, who already provide services with reimbursement that is nowhere near the actual cost of delivering that care.”

“Sweeping cuts to this vital program will hurt patients and their communities, and further cripple our state’s economy.”

December 4, 2015:  When the Connecticut General Assembly meets next week to adopt a budget deficit mitigation plan designed to close the projected state budget deficit – a budget deal that remains secret – it is widely expected that a portion of the cuts to Connecticut’s hospitals will be restored.

So what is the real situation about hospital funding in Connecticut?

The story itself provides an extraordinary glimpse about how Governor Malloy and the Connecticut General Assembly have used budget gimmicks to hide tax increases, while making state budgets appear balanced.

In this case the tactic goes back to a new taxing scheme that Governor Dannel Malloy proposed and the legislature adopted in 2012.

At the time, the initiative was designed to maximize the amount of Medicaid funding the State of Connecticut received from the federal government.  As part of the plan, a small amount of the extra funding would be used to provide hospitals with additional state aid while the majority of the new federal funds would be used to balance Connecticut’s General Fund budget.

The Hospital Provider Tax:

In summary, a new hospital tax was added to hospital bills in 2012.  Called a “provider tax,” hospitals were required to tax their revenue which, in turn, provided the State of Connecticut with about $350 million in new taxes.

The state then reimbursed the hospitals the $350 million along with an additional $50 million to help offset the growing cost of treating poor and uninsured patients.

Since the state of Connecticut could then report to the federal government that it had “increased” it’s overall Medicaid spending for the poor and uninsured by $400 million, the federal government increased its reimbursement to Connecticut by $200 million.  [As one of the nation’s wealthier states, Connecticut gets a 50% reimbursement for its Medicaid spending – meaning that for every $100 million Connecticut spends on healthcare for the poor, Washington sends the state a check for $50 million.]

In the first year of the program, the state of Connecticut took the $200 million in additional funding it received from the federal government and used $50 million of that money to pay for the increased aid to hospitals and used the remaining $150 million to balance its General Fund budget.

But by the second year, Malloy and the legislature began to change the program.

Not only did the State of Connecticut start keeping all of the “new” federal reimbursement for itself – to balance the budget – but it also stopped returning an ever larger share of the underlying “tax” money to the hospitals.

In year 2, the hospitals still paid in $350 million to the state of Connecticut, but now they ended up getting back $27 million less than they actually paid in.  Malloy and the legislature grabbed a total of $188 million to balance the budget.

The state’s bait and switch got worse as time went on.

Hospital Tax State Aid to Hospitals Hospital Tax Money used to balance state budget
2012 $349,100,000 $399,500,000 ($50,400,000)
2013 $349,100,000 $322,800,000 $26,300,000
2014 $349,100,000 $214,800,000 $134,300,000
2015 $349,100,000 $80,600,000 $268,500,000
2016 $556,100,000 $60,275,000* $495,825,000

*Data from the Office of Fiscal Analysis via CT Mirror

As the chart (above) reveals, in addition to keeping any and all of the “extra” federal funding that Connecticut collected, the state continued to skim off more and more of the actual hospital provider tax revenue.

Making the situation even worse, since the state was no longer using the hospital tax money to pay for healthcare for the poor, the amount of federal reimbursement dropped.

The CT Mirror explained;

“But that also meant Connecticut’s take from Washington dropped over the same period – despite rising Medicaid reimbursement rates. The state would have collected an extra $330 million in federal money over the past three years had it not scaled back this arrangement with hospitals.”

In then in September 2015, Malloy announced he was grabbing almost all of the remaining money to balance Connecticut’s growing budget deficit.

In September, Malloy announced plans to rescind three-quarters of the money hospitals were expecting to receive back from the tax this year, as well as three-quarters of the funding for a pool of money for six small, independent hospitals.

Instead of maximizing federal funding and doing a better job compensating hospitals for the care they provide to the poor and uninsured, Malloy and the legislature have created a program that doesn’t maximize federal funds and strips hospitals of the money they need.

And now, every week, we hear more and more bad news about staff being laid off, programs being curtailed and small hospitals being gobbled up by big hospitals.

It is fair to say that no governor (and legislature) have done as much damage to Connecticut’s system of comprehensive hospitals…Hospitals that serve as the health and economic anchor for many communities.

For more details and a list of how individual hospitals were cut see under Malloy’s September 2015 proposal see – http://ctmirror.org/2015/09/18/malloy-orders-emergency-budget-cuts-in-response-to-weak-stock-market/

You can read about the issue via the following Wait, What? posts

Malloy must take responsibility for many of the these hospital layoffs

When it comes to our state’s economy, our elected officials are our own worst enemies…

“There are no new taxes” – Governor Dannel Malloy 6/6/13

 

WARNING: The assault on Connecticut’s Hospitals – Here come the for-profit hospital operators

For decades, even centuries, Connecticut’s regional non-profit hospitals have been one of its greatest assets.  Emergency rooms, maternity programs, and access to local, high-quality hospital care have made our communities better, safer and healthier places to live and raise a family.

While improvements to the quality of care and the reduction of hospital medical errors have become a major concern across the nation, the notion of local, non-profit, comprehensive hospitals are the healthcare and economic backbone of many Connecticut communities.

But Governor Dannel “Dan” Malloy’s unprecedented cuts to Connecticut’s non-profit hospitals and his outrageous support for the for-profit hospital industry is already leading to the worst possible outcome.

The truth is that over the past two years, the Malloy administration has cut hospital funding by over $400 million and these cuts have led to layoffs and reduced services at numerous Connecticut hospitals.

The cuts have also left a number of smaller hospitals teetering on the edge of bankruptcy.

But worst of all, while undermining the funding of Connecticut’s non-profit hospitals, Malloy has also quietly opened the door and ushered in the for-profit hospital industry to our state.

Take the dire fiscal problems facing many hospitals, introduce the “profit motive,” and we’ll now be seeing the type of healthcare system that Malloy’s policies have created.

As recently reported by Connecticut media outlets, the for-profit Tenet Healthcare Corporation is already moving to purchase St. Mary’s Hospital in Waterbury, as well as, Waterbury’s other hospital.  Those of us in Eastern Connecticut know that Tenet is also making a play for hospitals east of the river.

For those who don’t know, Tenet Healthcare Corporation is the $12 billion national hospital operator that employs over 100,000 people and brags that they are, “a leading healthcare services company, through its subsidiaries operates 79 hospitals, 193 outpatient centers and Conifer Health Solutions, a leader in business process solutions for healthcare providers serving more than 700 hospital and other clients nationwide.”

As Tenant arrives in Connecticut, residents should be aware of the following information provided by Wikipedia,

  • In 2003, Tenet sold or closed 14 hospitals and closed more than 20 facilities in 2004 to achieve its financial performance goals.  Also in 2004, Tenet also moved its headquarters from Santa Barbara, CA to Dallas, TX.
  • In June 2006, Tenet agreed to pay $725 million in cash and give up $175 million in Medicare payments for a total of $900 million in fees to resolve claims it defrauded the federal government for over-billing Medicare claims.
  • In 2007, Tenet appointed former Florida governor Jeb Bush to its board of directors to improve its reputation.
  • In December 2011, the non-partisan organization Public Campaign criticized Tenet Healthcare for spending $3.43 million on lobbying and not paying any taxes during 2008-2010, instead getting $48 million in tax rebates, despite making a profit of $415 million, and increasing executive pay by 19% to $24 million in 2010 for its top 5 executives.
  • In April 2012, Tenet agreed to pay $42.75 million to resolve allegations that it improperly billed Medicare between 2005 and 2007.  

And the list goes on and on…

But as the CT Mirror reported earlier this week in an article entitled, St. Mary’s Hospital to be acquired by Tenet

St. Mary’s Hospital in Waterbury announced plans Tuesday to be acquired by Dallas-based Tenet Healthcare Corporation, a national for-profit hospital chain that’s already in the process of purchasing hospitals in Bristol, Vernon, Manchester and Waterbury.

St. Mary’s had been considering corporate suitors for several years. A previous deal to join forces with a different for-profit company and Waterbury Hospital fell apart two years ago over concerns about providing reproductive services and the rules St. Mary’s operates under as a Catholic hospital.

Although Tenet is also in the process of acquiring Waterbury Hospital, the deal announced Tuesday would leave each hospital in the city separate. Both would convert from nonprofit to for-profit.

[…]

Legislation passed this yearcrafted with Tenet’s other pending transactions in mind, changed state law to make it easier for non-profit hospitals to convert to for-profits.

So the when it comes to Connecticut’s hospitals, Malloy’s legacy is (1) record cuts and (2) making it easier for for-profit hospital chains to gobble up Connecticut’s hospitals.

Hardly the policies that Connecticut needs or deserves.

And why would Malloy push such detrimental policies on Connecticut?

One need only check out the Tenant Healthcare Corporation’s “corporate policies” which include the following:

We believe that it is important to participate in political, legislative and regulatory processes on issues that affect Tenet’s business and community interests, and are committed to doing so in a way that is consistent with our values, our legal obligations, and our Standards of Conduct…

Malloy must take responsibility for many of the these hospital layoffs

When Governor Malloy proposed his bait and switch “provider tax” strategy he promised hospitals that they would be “held harmless.”  The goal he said was simply to maximize federal reimbursement rates.

But two years later, the impact of Malloy’s decision to renege on that promise is leading to massive layoffs and undermining many of Connecticut’s hospitals.

The news headlines have been shocking;

“The state’s 30 acute care hospitals have shed 1,400 jobs in the past year”

“Hartford HealthCare is eliminating 350 jobs”

“Nearly 70 positions at The William W. Backus and Windham hospitals will be eliminated”

“List shows 176 Connecticut layoff notices so far (Norwalk Hour)”

“116 positions will be eliminated as a result of state budget cuts (Danbury News-Times)”

St. Francis Hospital and Medical Center is reducing the staff at its pediatric and adolescent clinic

“The layoffs announced Monday are the second round in the last seven months.  In November, Hartford HealthCare laid off 179 employees, including 10 each at Backus and Windham.”

So why are people being thrown out of their jobs when access to quality healthcare is more important than ever?

Malloy’s “provider tax” budget gimmick is a major factor.

When Malloy proposed his $1.5 billion tax increase in 2011, the plan also included an additional $350 million “provider tax” on hospitals.  Malloy claimed it wasn’t really a tax because the hospitals would get all the money back and the federal government would reimburse the state for a portion of that money.

Of course, to the self-pay patient, it was a tax.

And to the health insurance company it was yet another cost to be passed on to the people who pay for health insurance.

But the General Assembly approved Malloy’s plan anyway.

As part of his state budget coverage, CT Mirror’s Keith Phaneuf wrote last year,

“And then there’s really bad news: Gov. Dannel P. Malloy would cut their state funding by one-fifth over the next two years.

Put it all together, hospitals say, and at best, they will cut jobs and services. At worst, some will shut their doors. And facilities in the state’s poor northeastern corner say they are particularly at risk.”

The fact is that while the Malloy administration did pay the hospitals back the first year, his budget REDUCED the amount Connecticut hospitals received by about $27 million in the second year, $134 million the third year and $269 million in this year’s budget.

Overall, as a result of Governor Malloy’s budget strategies, while hospitals are being paid for additional Medicaid services, the State of Connecticut has reduced funding for its 32 chronic care hospitals by about $400 million dollars in the last two years alone.

The massive number of layoffs are proof that the “chickens are coming home to roost.”

And, none of this is a surprise to Malloy and the legislature.

As the Vice President of the Connecticut Hospital Association said,

“In short, what started 18 months ago as a scheme to help balance the state budget … has been converted to an unadulterated tax on hospitals…It’s one thing not to help hospitals, it’s something completely different when you harm hospitals.  “Taking patient care revenue to balance the state budget is just plain wrong.”

The state cuts to hospitals garnered some notoriety last spring when Malloy lost his temper on the WNPR radio show, “Where We Live,”

The CT Mirror reported at the time,

When Malloy appeared on May 6 on WNPR’s public affairs show “Where We Live,” he responded quickly when host John Dankosky asked about the hospital funding reductions the governor’s own budget staff wrote about in his budget.

“Let me stop you right there,” Malloy told Dankosky about four minutes into the program. “There aren’t cuts to hospitals.”

The administration insists that while the hospitals lose $400 million in tax reimbursements, they will make it back. But to do so, hospitals will have to treat thousands more poor patients covered through Medicaid.

“It is time for people to trim their sails, to find ways to deliver great service at less expense,” the governor said, adding that all hospital-related state spending should be $1.7 billion next fiscal year, just as it is this year. “We’re not cutting, we’re funding.”

What Malloy forgot was the evidence of the cuts was part of his own budget documents.

Again quoting the CT Mirror,

When the administration unveiled its latest budget plan in February, it initially referred to those changes in hospital reimbursements as spending cuts.

“The decision to reduce hospital funding was not an easy one,” the governor’s budget introduction states.

While the overall policy is rather complex, the impact has been pretty simple.  The way Malloy has handled the state budget is a primary factor behind the hospital layoffs that are taking place across the state.

The families that are being devastated by these hospital layoffs and the communities being impacted by reduced levels of services should tell Governor Malloy that at the very least, he must take responsibility for the actions he took that are now leading to many healthcare workers losing their jobs.

You can read the CT Mirror’s coverage of this issue here:  http://ctmirror.org/hospitals-warn-budget-cuts-will-cut-jobs-and-services-maybe-close-doors/ and here http://ctmirror.org/semantics-malloys-no-tax-pledge/

When it comes to our state’s economy, our elected officials are our own worst enemies…

With a state-economy ranked 50th in the nation, one would think that Governor Malloy and our elected officials who drop their economic development strategy that relies on corporate welfare to lure hedge fund companies and other corporate giants to move or stay in Connecticut.

But in the legislative session that just ended, Malloy and the majority decided to stay the course and, in the process, throw Connecticut’s hospitals under the bus.  Despite the rhetoric from the Malloy Administration that the massive cut to hospitals would have no impact, policymakers knew the consequences and turned a blind eye to the fact that the new state budget would lead to the loss of hundreds of Connecticut jobs.

The CT Mirror summarized the situations when they listed Connecticut’s hospitals as one of the biggest “losers” during the recent session.  The CT Mirror wrote:

“Hospitals: Hospital officials decried the governor’s proposal to cut more than $500 million in funding from hospitals, saying it will lead to job cuts and hurt patient care. But their pleas went largely unanswered. The next two-year budget slashes payments hospitals receive to compensate them for treating uninsured and underinsured patients, and money they currently receive as reimbursement for a provider tax they pay. The Malloy administration says the hospitals will still receive more money because more people will have health insurance, but hospitals counter that the funds will only come from treating thousands more poor patients…”

The impact of the Malloy administration’s approach started to be seen earlier this week when, according to the Connecticut Post, St. Vincent’s Medical Center “eliminated 100 positions and laid off nearly 50 employees this week, including some nurses and doctors. The cuts are expected to save the hospital about $10 million.”

As hospital’s vice president for health services explained, “This is a case of trying to look forward and protecting the direction and mission of our organization as the ground shifts beneath us.”

There is no question that many senior hospital administrators are overpaid and are diverting scarce resources away from patient care, but rather than confront that controversy head on, Malloy and the legislature simply slashed the amount of state funds going to hospitals and left the overcompensation issue unaddressed.

According to the Connecticut Post article, “Layoffs began Monday and continued Tuesday. The cuts were across all levels of the hospital, and included some nurse and doctor positions…Of the positions cut, 48 were filled and resulted in layoffs.”

As the Connecticut Hospital Association warned during the legislative session, “A state budget that cuts hospitals by $550 million will result in job loss and the loss of programs and services…”

There is simply no question that most hospitals around the state will be laying off employees as a result of the new state budget.

And for the record, these aren’t mythical six figure jobs that companies are supposed to be creating over the next ten years; these are the very real jobs of the very real residents in communities across Connecticut.

Adding to the disaster is the fact that not only will Connecticut residents be losing their jobs, but access to quality health care in our local hospitals will be undermined.

You can read more about the St. Vincent’s Medical Center layoffs here:  http://www.ctpost.com/local/article/St-Vincent-s-to-eliminate-100-jobs-4593474.php