SEIU Ballot Measures Bypass Legislature Sluggish on Hospital Reform
The Legislature may have convened for its 2014 session, but some of the biggest healthcare policy decisions of the year will not be made by the people’s representatives, but directly by the people, as the Service Employees International Union is vying for five ballot measures in the Nov. 4 general election.
“We worked with the Legislature,” said Arthur Towers, the political organizer for SEIU Local 503, which represents public employees. “Ten years of trying to roll the rock up the hill is probably enough.”
The ballot measures are aimed squarely at hospitals and health systems, which have been a leading driver in healthcare costs and operate with much less transparency than other businesses, leading to exposes in Time Magazine and elsewhere.
“People see the positive things out of the ACA, but know we still have a long ways to go,” said Felisa Hagins, the political organizer for SEIU Local 49, which represents healthcare workers. “We have to use every tool at our disposal to bring the costs under control.”
SEIU wants hospitals to post their charges for the major payers of healthcare and compare their costs with other hospitals. Another measure would require tax-exempt nonprofits to devote at least 5 percent of their costs to charity, while another would limit skyrocketing executive pay to 15 times the lowest paid workers.
Hagins said many Oregon hospitals currently pay their top executives 50 to 60 times as much as their front-line workers, while spending almost nothing on charity care. Many hospitals write off alleged losses from Medicare patients as their charity care, something the SEIU measure would bar.
The last two ballot measures would require posting of quality data and not allow hospitals to charge more than 30 percent of their costs. The federal government already requires quality rating of hospitals and adjusts Medicare payments accordingly, but the results are not widely posted.
Based on an interactive database from Kaiser Health News, two-thirds of Oregon hospitals had their Medicare rates reduced because of poor quality ratings. Bay Area Hospital in Coos Bay had the steepest penalty, followed by Providence Willamette Falls Hospital in Oregon City. Conversely, the state’s two for-profit hospitals, Willamette Valley Hospital in McMinnville and McKenzie-Willamette Hospital in Springfield, saw the highest bonuses from Medicare for good quality ratings.
Feds Delve Into Hospital Executive Compensation
At the federal level, the Office of the Inspector General, an agency under the Department of Health and Human Services, has started focusing on executive pay at non-profit hospitals to determine how much money could be saved by imposing upper limits on such salaries, The Lund Report has learned.
According to Medicare rules, executive and managerial salaries are expected to be reasonable. Even though the agency has never imposed such a rule, an analysis by the Internal Revenue Service found that CEOS of non-profit hospitals earned, on average $500,000 in 2006.
In a recent article that appeared in Modern Healthcare, Ralph DeJong, a partner with McDermott Will & Emery, an international law firm, acknowledged that the OIG has been looking at this issue for several months, saying, “It seems intuitive that, if the reported costs (for salaries) were reduced, the Medicare Trust Fund would save money. However, in our experience, the providers are able to show that their compensation practices for executive leadership are competitive with market practice and are the result of a very supportable practice of demonstrating fair-market value.”
Hospitals Charge Teachers Higher Costs
A study released by the Oregon Educators Benefit Board showed some hospitals were charging the health plan for teachers more than four times the amount of Medicare.
“I think most businesses would say a 30 percent mark-up is a good deal,” Hagins told The Lund Report.
Opposition to the SEIU ballot measures is likely to come from the Oregon Association of Hospitals and Health Systems, which has offered opinions to the attorney general’s office on the ballot titles. When asked to respond, the organization issued a brief statement to The Lund Report:
"These ballot measures will divide the healthcare community at the very time we are coming together to form new partnerships focused on measurable improvement,” said hospital association lobbyist Andrea Easton, alluding to the state’s coordinated care organizations, in which physicians and hospitals collaborate on health plans for Oregon’s Medicaid population. “Simply put, they will create problems, not solve them."
The heavy influence of the Oregon Association of Hospitals and Health Systems on state lawmakers and the Oregon Health Authority has prevented many of SEIU’s ideas from getting any hearing in the Legislature up until now.
Even more modest measures that SEIU backed like greater insurance rate review transparency went no where last session, quashed on the Senate floor by the powerful chair of the Senate Health Committee, Sen. Laurie Monnes Anderson, D-Gresham.
Another bill got past Monnes Anderson, limiting hospital self-referrals for physical therapists, only to be undermined by hospital interests during lightly attended rulemaking hearings at the Oregon Health Authority.
The law was enacted after allegations of bad behavior at hospitals such as Providence Health System, but even with bipartisan calls from Sen. Chip Shields, D-Portland, and Sen. Larry George, R-Sherwood, expressing their intent that physicians offer verbal notices of a conflict of interest, the health authority scotched that wish, moving toward rules that would leave that part out and siding with lobbyists from Providence and the hospital association, with which it enjoys a revolving door.
The hospital association enjoys a commanding presence when it comes to state government. Its chief lobbyist, Patty O’Sullivan, had a 33-year career in state government before switching roles while Gov. John Kitzhaber has called in former Providence Health & Services CEO Greg Van Pelt to help turn around the Cover Oregon debacle.
SEIU represents Providence hospitals in Seattle and Olympia, but it has failed to unionize any Providence hospitals in Oregon. Local 49 has organized Kaiser Permanente’s two Oregon hospitals and Legacy Emanuel and Legacy Good Samaritan hospitals in Portland.
The ballot titles are currently being certified by Attorney General Ellen Rosenblum, after which SEIU will have to gather 87,000 signatures for each one by July 4 to make the November ballot.
Towers said SEIU expects no trouble getting the required signatures, as a line of people formed at Pioneer Courthouse Square in downtown Portland to sign the signatures in the initial round. “These are common-sense proposals,” said Towers.
Spokesmen for Providence and Oregon Health & Science University deferred their comments to the hospital association, while Legacy Health System ignored a request for comment on this story.