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Advocacy

Statement of The Hospital & Healthsystem Association of Pennsylvania

For the House Health Committee

Submitted by
Scott Bishop, Senior Vice President, Legislative Services

Harrisburg, Pennsylvania
June 10, 2015

Introduction

Chairman Baker, Chairman Fabrizio, and members of the House Health Committee, I am Scott Bishop, Senior Vice President, Legislative Advocacy for The Hospital & Healthsystem Association of Pennsylvania (HAP).

HAP represents and advocates for more than 240 acute and specialty care hospitals and health systems across the state and the patients they serve. I should note that the last time HAP testified on the issue of certificate of need, that number was 250. In fact, between 2000 and 2014, the number of licensed general acute care hospitals has decreased from 190 to 158.

Similarly, from 2003 to 2014, the number of emergency departments in hospitals dropped from 182 to 157.

Even with those changes, Pennsylvania hospitals continue to support nearly 600,000 jobs and contribute more than $111 billion to the commonwealth’s economy.

We appreciate the opportunity to present the views of hospitals and health systems across the state regarding certificate of need.

Background

Pennsylvania’s certificate of need or CON program expired in December 1996. In 1997, the Department of Health strengthened certain licensure regulations to address quality of care issues related to high cost and/or highly technical health care services, such as organ transplants, neonatal intensive care, and cardiac surgery. The department also updated long-term care and ambulatory surgery regulations.

Beyond the quality measures related to these highly technical procedures, last week HAP was pleased to share with this Committee the results of our 2015 quality report. This report highlights the three-year collaborative effort by Pennsylvania hospitals to reduce preventable harm and hospital readmissions.

Coming together, the hospitals and health systems reduced all-cause harm by 37 percent, and all-cause readmissions by 26 percent. Because hospitals are working collaboratively––even in a competitive environment––more than 136,000 harm events were avoided, producing a savings of nearly $700 million. This significant progress indicates that CON is not needed to ensure that hospitals are where they need to be in serving our communities across the commonwealth.

Health care leaders, consumers, employers, policymakers continue to be concerned about the cost of health insurance and the cost of health care. However, there are no compelling reasons to reinstate CON in the commonwealth.

Access, cost and quality in a hospital setting are the result of many factors—general inflation, technological advances, pharmaceutical and other treatment costs, the aging of our state population, increased demand and utilization, and the expansion of limited service providers.

As a result, any policy initiative—in this case, CON—adopted to target only one factor will not have the desired outcome of significantly increasing access, reducing cost, or improving quality.

Hospital Community Position

While it has always been the case that individual hospitals due to specific circumstances have seen merit in CON, Pennsylvania hospitals and health systems do not support reinstituting CON because:

  • There is no evidence to demonstrate that a CON program reduces or contains costs for hospitals seeking to establish new services or to update existing services.
  • There are no evidence-based standards or criteria by which projects could be evaluated by state regulators or by which local groups would determine the need for health care within communities.
  • Licensure is more appropriate for setting standards, including assessing the relationship of quality and volume.
  • Reinstating an administratively cumbersome and costly process will result in unintended consequences, including stifling innovation in health care delivery in hospital settings and potentially preventing the appropriate availability of services within communities.

Instead of legislation that would seek to reinstitute a process that did not previously work, Pennsylvania’s hospitals and health systems would suggest further conversation on the following:

Accountability Across Delivery and Financing of Care—Hospitals and health systems believe that accountability and transparency are needed for both the delivery of care by facilities and health care practitioners, as well as the financing of care.

Accountability includes recognition of the role that the delivery system and payers have for supporting medical and other health professional education, the needs of the uninsured and publicly supported patients (Medicaid, Medicare, CHIP, etc.), and the need for communities to have access to needed, but less profitable services (e.g., obstetrics, trauma care, etc.). Accountability should also exist for all facilities and payers regardless of ownership status.

Balance between Market Forces and Regulation—Hospitals and health systems recognize that achieving an appropriate balance between competitive market forces and regulatory requirements is important in maintaining an innovative and progressive system of delivering and financing health care.

While state government has a compelling public policy interest in setting licensure standards as a means of assuring Pennsylvanians access to quality and safe health care services, market forces at the community level should continue to be the method for determining community need for health care facilities, expansion of services, or elimination of services.

Again, we do not believe that the state should be involved in facility need review, nor do we believe that CON should be re-established. Rather, licensure, market forces, transparency and accountability, and local community needs should drive the configuration of health care services.

Public Reporting—Transparency also is important. Assuring that patients, the public, community leaders, and other stakeholders have access to information on health care quality and pricing is important.

Transparency, both in health care delivery and in health insurance, should enable better decision-making by patients, payors, and other stakeholders within communities.

To this end, HAP continues to support reauthorization of the Pennsylvania Health Care Cost Containment Council, and consideration of what other sectors of the health care delivery or financing system should be doing to enhance transparency.

Reimbursement and Other Financial Issues—It should also be noted that reimbursement policies—particularly by Medicare and Medicaid—have significant implications for the delivery of care. In understanding the evolution of health care delivery, one also has to understand the impact that payment policies can have on market competition.

Such policies can create unintended financial consequences that jeopardize access to quality health care. This is one of the reasons HAP so strongly opposes the Governor’s proposed budget, and its proposed cut of $166 million in state and federal Medicaid hospital payments.

Conclusion

In conclusion, hospitals believe that fair competition is essential in health care delivery, just as it is in health care coverage. Competition that enables choice by consumers in accessing health care fosters innovation and improvement in health care and is essential in advancing medical practice and technology.

Competition that enables employer/employee choice in obtaining health care coverage advances affordability of insurance and benefit design. Competition by health insurers enables fair and appropriate payments to providers delivering cost-effective, quality health care.

Hospitals and health systems have been and continue to be committed to publicly demonstrating their efforts at ongoing quality and patient safety improvement.

Finally, any state oversight of facilities must enable access to the full continuum of services, enable cost-effective and safe delivery of essential hospital services, foster health care innovation, advance the coordination of care for individuals with chronic medical conditions, and support continuous quality improvement.

And, it must carefully balance the need for public protection with the benefits of a competitive market—both in health care delivery and in health insurance. It is for all these reasons that Pennsylvania hospitals and health systems do not support reinstatement of CON.

Thank you again for the opportunity to be here this morning and to provide the hospital community’s perspective on CON and accountability of the delivery and financing of health care. I welcome your questions.

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