Senate bill would allow five for-profits; SUNY plan ‘opens the door’
By Mary Frost
Brooklyn Daily Eagle
A controversial budget proposal designed to bring an experimental for-profit hospital to Brooklyn was killed in March, but now a last-minute Senate bill would create five pilot projects allowing private equity firms to invest in hospitals in New York State.
Health advocates and supporters of Cobble Hill’s Long Island College Hospital (LICH) fear that several financially troubled Brooklyn hospitals including LICH, Interfaith Medical Center, and (SUNY Downstate's) University Hospital of Brooklyn are among the targets of the bill. They plan a rally to protest what they call a for-profit takeover on Wednesday at noon at LICH.
“Healthcare advocates are calling on a moratorium on all Brooklyn hospital closures. . . and a commitment from our elected leaders to put patient care before corporate profits,” the NYS Nurses Association said in a statement.
NYSNA, along with doctors, SEIU 1199, local residents and patients, has been active in the long-running fight to keep LICH, a SUNY Downstate affiliate, open.
A “Sustainability Plan” recently submitted to the state by SUNY Downstate would open the door for private equity firms to take control of Brooklyn hospitals, NYSNA spokesperson Eliza Bates said. The Sustainability Plan would shrink Downstate and form a “voluntary network” with other Brooklyn hospitals under a hospital holding company.
Under the plan, the corporation that would act as a hospital holding company could receive “funds from any source and disburse funds as appropriate,” according to the legislative draft obtained by the Brooklyn Eagle.
“The bill would essentially allow the corporation to serve as a funnel for private equity investment in and control of hospitals,” according to NYSNA.
A coalition of unions representing University Hospital of Brooklyn said in a statement that the idea of establishing an undefined “corporation” that acts as a hospital holding company is “an untested strategy that has never been implemented anywhere in the United States” and will “further erode the financial viability of safety-net hospitals.”
A request to SUNY Downstate about private equity investment was not answered by press time.
On January 25, the Governor had proposed a pilot program that would allow business corporations to own and operate two hospitals in New York State, one to be located in Kings County. In the final budget round in March, however, the idea was scrapped. The new Senate bill would up that number to five.
New York has never before allowed for-profit hospitals to operate in the state. According to an analysis of the original pilot program published by the Epstein Becker Green legal firm, the legislation would be “a potentially significant development in New York,” allowing “increased capital investment in health care facilities.”
For-profit chains have taken over non-profits in other states over the last couple of years, with promised benefits including increased capital investment, streamlined management and efficiencies of scale. But the benefits to patients have not always appeared and many health care advocates have expressed reservations about their spread.
On January 24, the New York Times reported that the nation’s largest for-profit hospital chain failed to abide by an agreement to make improvements to “dilapidated hospitals” that it bought in the Kansas City area. HCA Healthcare was ordered to pay $162 million.
Profits at the chain more than tripled since 2006, according to the Times. HCA did this by billing insurance companies, patients and Medicare much more for its services, and by refusing to treat patients who came into emergency rooms with non-urgent conditions, “like a cold or the flu or even a sprained wrist,” unless those patients paid in advance.