Hospital bill passes Senate on party lines, heads back to House

House Bill 350 is headed back to the House, which must approve a Senate amendment, before it can go to the governor.

The bill to create a Delaware hospital budget review board, as expected, passed the Senate today after nearly one hour of comments by Republicans opposed to the state stepping into private businesses.

House Bill 350 will now return to the House, which must vote on a Senate amendment that changed several points in the original bill. If it passes there, it will go to Gov. John Carney.

His office has been intimately involved in the planning and negotiations of the bill, which will create an eight-member board that will have the power to force hospitals to change their budgets if they don’t meet a state benchmark.

Russell Huxtable

The final Senate vote was 16-7, with all Republican senators voting no, as well as Sen. Russell Huxtable, D-Lewes. Because there’s a Democratic supermajority in the House, Republican disapproval just doesn’t matter.

The Republican senators also all voted against Senate Amendment 1. It came about after the Delaware Healthcare Association, a hospital trade group, agreed to changes and announced it would stand neutral on the bill but reserved the right to fight for changes down the line.

The amendment include removing the Diamond State Hospital Cost Review Board’s ability to seize hospital assets, requiring at least one member from each of Delaware’s three counties to have a seat on the Board, and revising the cost cap requirement that would have resulted in our non-profit hospitals losing nearly $360 million, among other things.

The Republicans said in a statement that the bill was still unacceptable, even with the changes.

“We appreciate all the hard work and conversations the Delaware Healthcare Association has had with members of the General Assembly over the past two months,” their statement said. Republicans. “No doubt, this amendment makes a disastrous bill less bad. Even with the revised language, HB 350 is still a bad bill. Senate Republicans honored our commitment to our constituents and stood in opposition.”

Fears for hospitals

While Democrats and others pushing HB350 have repeatedly said hospital charges represented 42% of the healthcare costs paid by Delaware residents and studies — one by Highmark Blue Cross Blue Shield — showed Delaware hospital charged more than hospital in surrounding states.

“To be very clear hospitals are not the only drivers of health care costs,” Senate Majority Leader Bryan Townsend, D-Newark, said in his opening remarks. “In Delaware in particular, hospitals comprise a large percentage of total healthcare spending, and to which it can be attributed a large amount of healthcare cost increases.

“This bill addresses that issue. There is more that we have to do. We absolutely have to tackle the issue of prescription drug costs. We actually have to take a look at the issue of insurance more broadly in Delaware.”

Townsend said the main problem with healthcare is a lack of transparency, and other states — particularly Massachusetts and Vermont — have seen that improve under their laws.

“The very nature of a dominant actor in your marketplace can have distortive effects,” he said. “We have to have conversations. We have to have frameworks whereby which we can point Delaware in a more cost sustainable, better outcome direction.”

Each of the six Senate Republicans stood to oppose the bill. Many questioned the Democrat use of the term “collaboration” when it comes to the bill.

Sen. Brian Pettyjohn, R-Georgetown, said he had heard a lot of talk about hospital reserves being an issue. Hospitals need those reserves to be sure they can pay bills when issues like cyberattacks slow down and things like the started of the COVID-19 pandemic.

“Four years ago, we held our medical providers and professionals in high esteem. We called them heroes,” he said. “We saw hospital systems adapt, adjust and provide services to the masses throughout our state in urban areas. We were partners in photo ops throughout the pandemic with our doctors, many of who are here today with providers.

“Now the state is saying that they know that the state knows how to run and budget their operations better than they can when the state came to them for help in 2001.”

Sen. Trey Paradee, D-Dover, said he had some of Pettyjohn’s concerns until he spent about 10 hours going through Bayhealth’s 990s, one of their IRS forms. He said he was surprised to find analysts praising the hospital’s double-digit earnings.

“And it clicked,” he said. “They have a blank check, right? And over the last several years, Bayhealth has acquired dozens and dozens of small practices. They’ve built facilities all over Kent and Sussex County. It’s like as if somebody’s not able to get into a car anymore and drive 10 miles. And these things cost money. Millions of dollars, millions of dollars.”

Paradee said there was no doubt Bayhealth’s Milford hospital was needed. It was a $300 million facility paid for with cash, he said.

He questioned who was in the room when those decisions are made, and what the return on investment is expected to be.

Paradee noted that state utilities have to justify their construction and expansions, and hospitals should have to, too.

The GOP members said in their statement that they continued to have deep concerns about a politically appointed board having full oversight and, essentially, control over the budgets of Delaware’s non-profit hospitals.

“Rarely, if ever, has the government corrected an issue by directly involving itself in the private sector,” they said.

RELATED STORY: Hospitals, legislators reach deal on state review board

They also pointed out that supporters claim the bill will help lower state employees’ healthcare costs but Townsend is spearheading Senate Bill 10, dubbed the Delaware Pre-Authorization Reform Act of 2023.

It would require quicker responses to requests for pre-authorization and make those authorizations good for seven months instead of 60 days.

The Republican statement said that nearly every person who offered public comment in a May 15 hearing testified the bill would increase the cost of healthcare for state employees and retirees.

“Make no mistake, the state’s non-profit hospitals are not at fault for the rising cost of healthcare and health insurance premiums,” the statement said. “For these reasons stated, we voted No on HB 350.”

Betsy Price

Betsy Price is a Wilmington freelance writer who has 40 years of experience, including 15 at The News Journal in Delaware.