HEALTH CARE - HEALTH DESPAIR
Its Time To Pass The Gravy.
The delivery of healthcare in the Commonwealth of Kentucky is corrupt. Those who have accepted responsibility for the oversight of our healthcare systems are the instruments of that corruption. Unfortunately, Kentucky is a reflection of what is happening in every state in the union — particularly those 35 states that have Certificate of Need (CON) legislation in place.
The Bureau of Labor Statistics (BLS) tells us that in 2020, the healthcare industry in the United States accounted for 11.1 percent of all nonfarm payroll employment and 7.0 percent of the national GDP. Furthermore, the number of healthcare establishments in the US has increased from about 5,000 in 1988 to about 15,000 today (click on the green icon under Back Data). Ten-thousand of those came on-line between 2013 and 2023. (BLS) However, over that same period the number of independent, rural hospitals has rapidly declined; a trend which shows no end.
In The Certificate Of Need (Con); A Web Of Deceit I wrote:
“Rather than ensuring the “equitable distribution” of health care delivery, the CON has failed to protect rural hospitals which are closing at an alarming rate all across the nation in both those states that have CON requirements and those that do not.”
And;
“Access to inpatient care continues to deteriorate as 167 rural hospitals since 2010 have either closed or converted to a model that excludes inpatient care and 418 rural hospitals are “vulnerable to closure” ….”
If the CON were an effective strategy for healthcare equity rural hospitals would be increasing in number and not closing. Why are these closures happening? Why is the CON not being used to ensure access to healthcare delivery in rural America? AND why is our legislature using the CON to prevent competition in areas dominated by single large healthcare systems?
After several failed attempts to have the CON brought to a legislative hearing, on June 21, 2024 a hearing on the CON was finally held by the Kentucky Senate Interim Joint Committee on Licensing, Occupations, and Administrative Regulations. The first witness was Senator Stephen Meredith, Kentucky Senate District 5, a rural district southwest of NKY about midway between NKY and Louisville.
Senator Meredith has a long and successful record of accomplishment in the healthcare arena. For 30 years he was the CEO of the 687 bed Twin Lakes Community Hospital in Litchfield, KY (Senate District 5). For context, Twin lakes Community Hospital is part of the Owensboro Health system:
“Owensboro Health reaches an 18-county area, serving nearly 500,000 in Western Kentucky and Southern Indiana. The system includes Owensboro Health Regional Hospital, nationally recognized for design, architecture and engineering; Owensboro Health Muhlenberg Community Hospital; Owensboro Health Twin Lakes Medical Center; the Owensboro Health Medical Group comprised of over 350 providers at more than 30 locations; three outpatient Healthplex facilities, a certified medical fitness facility, the Healthpark; a weight loss program, and the Mitchell Memorial Cancer Center.”
In other words, Owensboro Health is a monopoly just like St. Elizabeth Health in Northern Kentucky.
Senator Meredith spoke in opposition to either eliminating or simply modifying the Certificate of Need, arguing that free market principles were detrimental to hospital operations.
Senator Meredith’s curious statement that free market principles are bad for hospitals is an odd thing for a self-proclaimed “conservative Republican” to say - particularly since he had a 30 year career as the CEO of a large hospital in which every aspect of its operation from grounds keeping to purchasing, payroll, and the surgical services it offered require participation in a free market environment — unless, of course, your goal is to place restrictions on a patient’s access to care from a different hospital or healthcare system. And that is precisely what Senator Meredith is hoping to do.
Why would Senator Meredith want to restrict his constituent’s access to alternative healthcare providers? As Puff Daddy tells us “Its all about the Benjamins” and here is how it works.
According to Senator Meredith rural hospitals are closing because of Medicare Advantage, the low cost, low coverage, low paying government insurance plan created by the Affordable Care Act. IF, Senator Meredith argued, there were more privately insured patients to fill the reimbursement gap in rural Kentucky then rural hospital closures would not be occurring at such a rapid pace. In other words, there’s nothing to be done about the decline of healthcare access in rural Kentucky - unless, of course, the federal government becomes involved.
Medicare Advantage is only one bit of crab grass in the weed patch known as “The Healthcare Industry”. Here is what the rest of that patch looks like.
At the about the same time that the number of hospitals were dramatically increasing so was the cost of healthcare for those with private (non-government) insurance or who self-pay. The following graph shows that between 2014 and 2018 the cost of inpatient care for the privately insured increased almost 22% - a rate far greater than that for those with government operated insurance.
So, what happened in 2014 that created this insurance disparity in cost and trigged the collapse of the independent rural hospital system and the growth of the monopolistic healthcare systems like Owensboro Health and St. Elizabeth Health?The Affordable Care Act aka ObamaCare happened and while cost of public healthcare remained relatively constant - the cost of private insurance and for those who self-pay increased 21.6%.
Here is how the corruption dots connect.
According to Forbes citing data from the Bureau of the Census, ‘…65.6% of insured adults have a private healthcare plan compared to 36.1% who have a public (government) healthcare plan’. Clearly those with private healthcare insurance or who self-pay are the greatest source of income for hospitals. Because hospitals have low operating margins, they need to capture as much of the private insurance and self-pay segment as possible. This is precisely why Sara Giolando, Senior Vice President, St. Elizabeth Health said this in reference to The Christ Hospital’s effort to build a same day surgery center in Northern Kentucky on St. Elizabeth’s turf:
People say, ‘What’s wrong with competition?’ We say nothing, as long as it’s fair,” said Sarah Giolando, St. Elizabeth Senior Vice President and Chief Strategy Officer. “You can’t take all the gravy. You can’t just take people with the insurance and the self-pays and let another facility be the safety-net position.”
The graph from the Health System Tracker makes it abundantly clear that the privately insured and those who self-pay are Ms. Giolando’s “gravy”. Without a doubt, Ms. Giolando and her boss, St. Elizabeth Health CEO and President Garren Colvin are not concerned that you have healthcare options convenient to you but rather that you don’t have those options so that they can protect their share of income derived from the privately insured and those who self-pay. The CON is the insurance that hospital systems need in order to maintain the status quo and prevent other hospital systems from taking a share of the revenue provided by the privately insured and those who self-pay. And that is why the healthcare industry is contributing so many dollars to our state legislators - particularly those like Senator Meredith, Chairman of the Senate Health Services Committee.
Protecting the CON is Senator Meredith’s cash cow. In just one year, from May 2023 to May 2024 Senator Meredith accepted more than $50,000 in campaign contributions from the health care industry. IF the CON were eliminated today Meredith’s campaign coffers would be empty. But he’s not the only state legislator taking money from the same healthcare industry that they regulate.
Representative Kim Moser, Chairman of the Kentucky House Health Service Committee, and Senator Julie Rocque Adams, heir apparent to the retiring Damon Thayer, Majority floor leader are also reaping the financial benefits of a close association with the healthcare industry. Meredith, Moser, and Adams are just the proverbial tip of the iceberg. IF they are the recipients of the healthcare industry’s largess so are others in the state. Furthermore, IF it is happening in Kentucky it is happening everywhere else in the United States.
There is little doubt that this was a designed realignment of America’s healthcare system from a free market system to an anticompetitive, quasi-government controlled business that could require you and me to comply with their whims or be punished for refusing to comply.
Accepting contributions from an industry that you regulate drew the ire of the American People during the COVID debacle when we learned how intimately associated the pharmaceutical industry and our public health agencies, and healthcare system are. Accepting campaign contributions from the industry that one regulates is no different.
What does that mean for you and me? In places like Northern Kentucky and Senator Meredith’s Senate District 5 there are no real choices in health care providers. Nor are there employment choices for healthcare workers. Prices are set. Pay is set. Benefits are set. In other parts of Kentucky access to health care is diminishing rapidly. In some parts there is no access at all.
The most immediate and simplest way to sever the financial relationship between our legislators and the healthcare industry is to repeal the CON and let free market forces operate. It is unconscionable that our elected legislators who are overseeing the healthcare industry in the Commonwealth receive virtually every penny of their campaign funds from the very same industry they are charged with regulating and virtually none from those whom they represent.
Giolando and Meredith have made it clear that the healthcare industry is far more concerned with its financial health than they are for the health and well being of the Commonwealth’s People.
“10The thief comes only to steal and kill and destroy; I have come that they may have life, and have it to the full. 11“I am the good shepherd. The good shepherd lays down his life for the sheep. 12The hired hand is not the shepherd and does not own the sheep. So when he sees the wolf coming, he abandons the sheep and runs away. Then the wolf attacks the flock and scatters it.” John 10:10-12
Union, Kentucky
31 June 2024