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Bill would let companies buy RI hospitals in bulk

January 26, 2012

I’ve been talking about the Hospital Conversions Act a lot lately. That’s because Steward Health Care System can’t buy Landmark Medical Center until it gets permission from state regulators.  The Hospital Conversions Act guides that decision.

(If you need more background, check out my earlier post.)

This week, three senators sponsored a bill in the General Assembly that would alter the Hospital Conversions Act. The legislation doesn’t do much to the actual process for approving a hospital merger or sale; it’s more concerned with how many hospitals a for-profit can buy in a given year. Here’s what the proposed legislation says-

Notwithstanding any other provision in this chapter, nothing herein shall be construed to prohibit a for-profit hospital, its subsidiaries or affiliates, from applying for, and receiving approval of a conversion of more than one hospital in the same year, or any subsequent year, and each such application shall require review and approval from the department of attorney general, and from the department of health in accordance with the provisions of this chapter.

This act shall take effect upon passage.

Basically, the bill would make it possible to buy more than one hospital in a year, or within multiple years. Right now, for profits have to buy one hospital at a time and wait three years until they try to purchase another.

Now why would Senators Picard, Ruggerio, and Cote introduce this legislation? Is there someone out there that wants to buy Rhode Island Hospitals in bulk? Two for the price of one? Buy one, get one half off?

Two of these senators are from Northern Rhode Island- Picard represents Woonsocket and Cote represents North Smithfield. Might this have something to do with Landmark’s buyer? Nothing confirmed yet.

I’ve been told  the HCA three year waiting period existed so regulators could watch a for profit in action- did it keep all those promises it made when it bought the first hospital? The regulation was meant to prevent an outsider from suddenly and completely overtaking our health care system. But that was then.

Now, community hospitals in Rhode Island are struggling. They can’t bargain for the same reimbursement rates that hospital networks can. For many, the solution lies in being a part of a larger system. Is it better to let one for profit own most of them or watch many for profits buy them up and further fragment the system?

Then again, do we want to give an outside for-profit company that much power? And if we change our standards for these companies, should we protect our own kind and make it easier for non-profits like Lifespan and Care New England to merge?

Tricky questions in an era where health care is changing.  Would you support this legislation?

7 Comments leave one →
  1. Nick Tsiongas MD permalink
    January 27, 2012 10:14 pm

    What horrible idea. Rhode Islanders have kept investor-owned hospitals out of our state for 25 years for a reason. These hospitals situate themselves in areas of high insurance coverage, cut needed but costly services and jobs, often transfer uninsured patients to other community-run facilities, and perhaps because they are motivated by paying dividends to their stockholders, are more likely to be charged with Medicare fraud.

    In the early 1990’s the state Supreme Court ruled that if such hospitals were found to place the public health in danger by such practices, it was constitutional to ban them entirely.

    The Hospital Conversions Act was passed in 1997 primarily to make it more difficult for such enterprises to come into a state and go on a wholesale buying binge of existing hospitals. If you think health care costs are high now, wait till our hospitals are owned by private equity firms. Both RIers with insurance and RI businesses that purchase insurance should shudder at the thought of the weakening of the HCA.

    The 1997 effort to restrict the presence of for-profit hospitals was supported by most of the RI Congressional delegation including then Senator Lincoln Chafee. One can only hope that Governor Chafee remembers and agrees.

    Saving Landmark Hospital is one thing, but letting the fox into the whole chicken coup is a bad, bad idea.

    What are these legislators thinking?


  1. More on legislation for buying RI hospitals in bulk « The Pulse: health care in RI
  2. What’s going on with Steward? « The Pulse: health care in RI
  3. Steward update « The Pulse: health care in RI
  4. More proposed changes to hospital sales in RI « The Pulse: health care in RI
  5. How will the public respond to Landmark sale? « The Pulse: health care in RI
  6. Landmark and other updates « The Pulse: health care in RI

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