NEWS:
ChristianaCare Files Lawsuit Seeking to Overturn State Law Usurping Control of Hospital Budgets
A controversial new state law that gives a state board budgetary control of Delaware’s non-profit hospitals is being challenged.
ChristianaCare filed a lawsuit Monday in Chancery Court against Gov. John Carney and other state officials seeking to overturn the law that targets the state’s non-profit hospitals. All of Delaware’s general acute care and pediatric hospitals are nonprofit organizations. ChristianaCare operates three hospitals, including two in northern New Castle County.
House Substitute 2 for House Bill 350 (as amended) passed the General Assembly earlier this year in a contested vote that essentially broke along party lines. Gov. Carney and House and Senate Democrats leveraged their control of the lawmaking process to enact the legislation despite the concerns expressed by healthcare providers. The measure was signed into law in mid-June.
Under the new law, the governor appoints seven members to the Diamond State Hospital Cost Review Board. Hospitals must submit their operating budgets, capital budgets, recent expenditures, and workforce development efforts to the board for annual review.
Hospitals with budgets exceeding a benchmark targeted growth rate set by the state or not meeting other performance parameters can be required to fashion an improvement plan. The law allows the board to coerce compliance by imposing fines of up to $500,000 on hospitals that fail to conform.
According to a statement released by ChristianaCare, its complaint asserts that the law violates Delaware’s general corporation statutes and the state constitution by seizing the decision-making authority of private non-profit hospitals and giving it to the “unelected and unaccountable” Diamond State Hospital Cost Review Board.
The complaint also argues that the law contradicts the U.S. Constitution by taking over private hospital governance and budgets, forcing them to disclose confidential information, and unfairly targeting them.
The 15 members of the House Republican Caucus, all of which opposed the legislation, were quick to support ChristianaCare. “This poorly conceived law is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus,” read a statement issued by the organization. “A state government with one-party rule does not engage in consensus building nor reflect any perspective that is not in keeping with its monoculture of political thought. The result is a growing list of plaintiffs like ChristianaCare who are forced to head to court to secure the fair consideration they should have received in the legislature and by the governor.”
State Rep. Valerie Jones Giltner (R-Georgetown), a retired critical care nurse and healthcare consultant, said she hoped ChristianaCare’s challenge would be successful. She expressed concern about the legislation’s potential to severely disrupt the Delaware healthcare market, noting that for-profit corporations have a history of taking over failing non-profit hospitals. The new law does not impact for-profit hospitals.
“I worked with hospital administrations over the past 23 years before I retired to help them improve performance and patient outcomes and reduce costs,” she said. “For-profit companies are very selective in choosing their patients, and if they displace our state’s non-profit hospitals, it will exacerbate existing challenges to provide adequate medical service access to disadvantaged groups.”
Supporters of the legislation maintained that the authoritarian approach was needed to control rising healthcare costs. State Rep. Bryan Shupe (R-Milford South) takes issue with that rationale.
“There are a multitude of factors driving the escalation of healthcare,” he said. “Collectively, Delaware's non-profit hospitals actually posted a negative operating margin last year,” Rep. Shupe said. “If this misguided law is allowed to stand, it will prevent them from investing in new technology, curtail or eliminate facility expansions, and make it harder to recruit and retain medical professionals. We need a responsive, growing healthcare system, not one that is shackled by bureaucracy.”
State Rep. Jeff Hilovsky (R-Long Neck, Oak Orchard) agrees with ChristianaCare’s arguments. “This law is a clear case of the state seizing control of private companies. It is entirely at odds with our nation’s founding principles and the law expressed in our state and federal constitutions. I hope the Chancery Court overturns this overreach of governmental authority for the sake of the quality of our future hospital services and to discourage this type of legislative hubris in the future.”
|