Gov. Cuomo’s Brooklyn for-profit hospital proposal worries hospital workers and local reps

February 4, 2013 By Mary Frost Brooklyn Daily Eagle

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Doctors, nurses and staff of Brooklyn’s ailing Long Island College Hospital (SUNY Downstate at LICH), and Interfaith Medical Center fear that Governor Andrew Cuomo is planning to close one or both hospitals and replace them with a for-profit hospital, something that has never been allowed in New York State before.

Supporters and residents of Bedford Stuyvesant rallied in front of the Governor’s office in mid-Manhattan on Monday to protest what they see as a done deal.

“The governor and real estate developers are pushing an experimental for-profit healthcare pilot program,” Linda O’Neill, an RN at LICH said in a statement. “Brooklyn patients are their guinea pigs.” The statement issued by rallying RNs blamed the financial crisis facing LICH and Interfaith in part “to gross financial mismanagement of private consulting firms.”

On January 25, Gov. Cuomo proposed a budget which included 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.

According to an analysis of the legislation published by the Epstein Becker Green legal firm, the legislation is “a potentially significant development in New York,” allowing “increased capital investment in health care facilities.”

To operate the hospitals, the business corporations must be affiliated with a Public Health and Health Planning Council (PHHPC) approved academic medical institution. PHHPC is a statewide health planning and oversight body.

The term “affiliated” has not been defined as yet, according to Epstein Becker Green. For example, LICH is affiliated with the major academic center SUNY Downstate, while The Brooklyn Hospital Center is a “clinical affiliate” of Weill Medical College of Cornell University.

Previously, the state’s Certificate of Need (CON) process prevented for-profit hospitals from operating in the state, under the assumption that the provision of health care “is a charitable activity and that there must be transparency and accountability as far as the owners of hospitals are concerned.”

The pilot program would be evaluated after two years.

SUNY Downstate spokesperson David Doyle, when asked on Monday how SUNY Downstate fits into Gov. Cuomo’s proposal, told the Brooklyn Eagle, “The process has not gotten to that point — it seems the intent is to ‘allow’ a for-profit partnership but it is not a necessary requirement. Currently we do not know how Downstate fits into the plan since there is no plan.”

Assemblywoman Joan Millman told the Eagle on Monday she had reservations about allowing a for-profit to operate a hospital in Brooklyn. “Their first fiduciary responsibility is to their stockholders, not their patients. The concept is a troubling one.”

For-profit chains have taken over non-profits in other states over the last couple of years, with promised benefits including streamlined management and efficiencies of scale. But the promised benefits to patients have not always appeared.

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. The judge also ordered a court-appointed accountant to determine whether HCA had actually provided the charitable care that it agreed to when buying the non-profit hospitals.

Three private equity firms, including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate bought HCA in late 2006 in a $33 billion deal, and profits more than tripled, according to the New York 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, according to the Times.

For-profit hospital ownership can be a cutthroat business. Shareholders of HCA filed a lawsuit against Bain Capital and the other owners in September, 2012, alleging the firms cost shareholders billions in a bid-rigging conspiracy when they bought the company, according to “Beckers Hospital Review.”

Two months ago CBS published an investigation of the country’s fourth largest for-profit hospital chain, Health Management Associates (HMA). According to CBS, HMA “relentlessly pressured its doctors to admit more and more patients — regardless of medical need — in order to increase revenues.” Nearly half of HMA’s 2011 revenues of $5.8 billion came from Medicare and Medicaid programs.

Private, for-profit chains have an especially strong incentive to take over failing non-profit hospitals at this time. Due to changes in the health insurance law, in 2014 more needy and disabled people will become eligible for Medicaid. Tax credits will also come on line to help middle-class Americans buy insurance coverage.

That translates into more insured patients for hospitals, profit or non-profit.

A public hearing on the state of Brooklyn’s hospitals will be held at Borough Hall on Friday, Feb. 8 at 10:30 a.m.