Bacon's Rebellion

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Politicians and COVID-19: First, Do No Harm. Second, Do No Harm

—

by

James A. Bacon
in

by James C. SherlockDo Not Regulate Surgical Decisions 

There are things the state should not do during an emergency. Regulating elective procedures is one of them. I agree with the statement of the hospitals[1].  If we had more hospitals and far more physician-owned ambulatory surgical centers, the problem would have an alternative solution. But we don’t because of 47 years of Certificate of Public Need regulation. The decisions of Virginia’s Health Commissioners artificially limiting supply are available in state records for all to see.

A key reason I agree with the hospitals position that decisions on surgery should remain at the local level is that even if some might think such things should be regulated by the state, and I don’t, it is far too late for intervention in a matter that the state is not set up to oversee. Blind regulation is a terrible thing to contemplate.

Deal with the Connected Issues of COPN and State Oversight of the Business of Healthcare

The Governor just waved Certificate of Public Need (COPN) restrictions, but effectively only for certificate holders. The Governor and the General Assembly can heavily reduce the restrictions in COPN or repeal it next year, but there are legislative solutions immediately available that can help. In the upcoming special session, the General Assembly should pass two bills that were laid on the table in the House of Delegates earlier this year:

  • HB 608 to set up Healthcare Enterprise Zones to bring better primary care to the poor; and
  • HB 1094 to exempt physician-owned surgical centers from COPN.

The bills would take effect in the summer and fall and are necessary as soon as they can be implemented. Waiting until 2021 to pass those bills is clearly wrong. Each is modeled after successful programs in Maryland where they have proven to save Medicaid tens of millions of dollars[2] (in the case of HB 608) and hundreds of millions of dollars (in the case of HB 1094) in excess of their costs. The relative costs to Medicaid of surgeries between hospital outpatient departments and independent ambulatory surgical centers is available from the Department of Medical Assistance Services. They basically cut the costs in half. Appropriations Committees should base budget cost-benefit analyses for HB 608 and HB 1094 on those documented data.

Each bill was modified heavily in the drafting process and in committees from the language submitted. I can provide more detail to flesh out each bill to restore language to more closely model the bills on the Maryland models should the General Assembly request it.

Finally, I recommend legislation next year to appoint and empower the State Corporation Commission to oversee the business of healthcare delivery in Virginia. It is the business decisions of the healthcare providers, not their medical decisions, that has left us short of supplies, equipment and training with which to combat COVID-19. State oversight is entirely missing except for the COPN program. COPN limits supply with provides permission slips, but does not otherwise oversee the business, including the regional monopolies it has created. The Department of Health will retain oversight of the practice of medicine.

[1]https://www.vhha.com/resources/wp-content/uploads/sites/17/2020/03/Elective-Procedures-Position-Statement-3.18.20.pdf[2]

https://www.jhsph.edu/news/news-releases/2018/maryland-health-enterprise-zones-linked-to-reduced-hospitalizations-and-costs.html

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21 responses to “Politicians and COVID-19: First, Do No Harm. Second, Do No Harm”

  1. James A. Bacon Avatar
    James A. Bacon

    I totally agree with you. State bureaucrats should not be dictating to hospitals when they can or cannot take patients with elective procedures. Such decisions to be left to the hospitals. Hospital management knows far better than some bureaucrat how to juggle their beds and patient loads. As Dick Hall-Sizemore mentioned in the previous post, hospitals could face a severe cash flow crunch. They should be allowed to generate revenue as long as they have treatment capacity to spare.

  2. Steve Haner Avatar
    Steve Haner

    I would vigorous oppose adding this responsibility to the State Corporation Commission, which already oversees the insurance side of the health care world. Both of those proposed bills had great merit, but are the votes there to pass them as emergency legislation at a special session not even called yet? Maybe the first one, the one dealing with “enterprise zones” for health care. This morning’s RTD has a full page ad from the Commonwealth Institute, Poverty Law Center and a handful of disease-specific associations asking Northam to veto the association health care plan bills, fighting (again) against any alternatives to the Obamacare mandates. We are still locked in the old battles and not really looking at what this crisis is teaching us.

    I said earlier that the Bernie Bros were going to get the America they want out of this, and this dust up over the hospitals is another sign of it. Here are the calls for deeper state control over the hospitals, blaming them for the shortage of supplies (largely created as Larry has point out by the overall move away from stockpiles and reliance on “on time” logistic chains.) A month ago people started hoarding the masks, using 99% of them inappropriately. I remain confident the supply chain will be caught up soon. I suspect the media is a day or two behind on that story, as with others. And I suspect at some point the hospitals may figure out that their asking for a federal bailout will turn them into federal institutions.

  3. sherlockj Avatar
    sherlockj

    You ask that the SCC not be permitted to regulate the business of healthcare delivery while regulating the business of health insurance. You once told me that freedom abused is freedom lost. I am not for free market regulation, but we have not had a free market in healthcare delivery since 1973. Given that the state has actively created a system centered on regional monopolies, this is a plea to regulate those monopolies in the same manner we regulate public utilities that have been granted monopolies by the state. The fact that the boards and CEOs of some of those monopolies have abused their positions in restraint of trade has been reported in the press including this space for decades. They must be regulated, and there is no one in the Health Department assigned to read business plans much less financial results. VDH is not by design the place to look for regulation of the monopolies they have created. The SCC is.

    1. Acbar Avatar
      Acbar

      I think you’re both right. The SCC is the agency we already have that’s equipped to engage these tradeoffs head-on. And the SCC shouldn’t regulate both health facilities and health insurance. The misfit is regulation of the the insurance business, one that really could be spun off and regulated by another agency.

      Don’t forget that the SCC too has COPN authority when it comes to building facilities to go into a utility’s rate base. In my opinion they should be rejecting ALL new generation applications categorically under that authority, telling DE and the like: if it’s really such a good idea, go build it on your (shareholder) nickel for the competitive marketplace. It would be nice if hospital regulation were as simple.

  4. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Just an observation that may disappoint you and to which Steve alluded: At the upcoming “reconvened” Session, the General Assembly cannot consider new bills. The purpose of this session is only to consider amendments to bills, including the budget, and any vetoes, including budget item vetoes, proposed by the Governor.

    The Governor could call a special session that would meet the same day as the Reconvened session. The Reconvened session would adjourn and then immediately the Special Session would commence. Then new bills could be considered.

  5. sherlockj Avatar
    sherlockj

    Doesn’t disappoint me. That is exactly what should happen.

  6. Steve Haner Avatar
    Steve Haner

    Which is it, Sherlock – too much freedom for the health care industry in the past or too much regulation? I tend to agree with you that regulation (the greedy kind, intended to create barriers to competition) has added to the problems now on display. But I do not for one second think, absent COPN, Virginia would now have a surplus of ICU beds for respiratory distress cases. We might have more ambulatory surgery centers, more imaging facilities, abundant plastic surgery outlets, but the capital would be seeking the highest returns, not the greatest social good. You don’t take all that capital and build out the hospital network you might need once or twice in a lifetime, to sit empty 39.5 years out of 40. When and if the crunch comes, hospital beds in big tents or the convention center will work just fine. Some plastic surgeon or neuro nurse may find themselves working ER intake for the first time since school.

    The General Assembly has demonstrated a great willingness to interfere in the decisions of the SCC with regard to the energy market and would do exactly the same if the SCC managed the health care industry. “No man’s life, liberty or property are safe while the legislature is in session” is the most true statement I know, perhaps second to the Golden Rule.

    If there is agreement on five or six things the GA can do to change the law short term, if it’s votes are needed to unwind the budget, then a limited purpose special session should be called. But only if there is 70-80% consensus on what to do. Conservatives on a tear to fix things can be just as dangerous as liberals would be.

  7. James A. Bacon Avatar
    James A. Bacon

    I totally agree with you. State bureaucrats should not be dictating to hospitals when they can or cannot take patients with elective procedures. Such decisions to be left to the hospitals. Hospital management knows far better than some bureaucrat how to juggle their beds and patient loads. As Dick Hall-Sizemore mentioned in the previous post, hospitals could face a severe cash flow crunch. They should be allowed to generate revenue as long as they have treatment capacity to spare.

  8. Steve Haner Avatar
    Steve Haner

    I would vigorous oppose adding this responsibility to the State Corporation Commission, which already oversees the insurance side of the health care world. Both of those proposed bills had great merit, but are the votes there to pass them as emergency legislation at a special session not even called yet? Maybe the first one, the one dealing with “enterprise zones” for health care. This morning’s RTD has a full page ad from the Commonwealth Institute, Poverty Law Center and a handful of disease-specific associations asking Northam to veto the association health care plan bills, fighting (again) against any alternatives to the Obamacare mandates. We are still locked in the old battles and not really looking at what this crisis is teaching us.

    I said earlier that the Bernie Bros were going to get the America they want out of this, and this dust up over the hospitals is another sign of it. Here are the calls for deeper state control over the hospitals, blaming them for the shortage of supplies (largely created as Larry has point out by the overall move away from stockpiles and reliance on “on time” logistic chains.) A month ago people started hoarding the masks, using 99% of them inappropriately. I remain confident the supply chain will be caught up soon. I suspect the media is a day or two behind on that story, as with others. And I suspect at some point the hospitals may figure out that their asking for a federal bailout will turn them into federal institutions.

  9. sherlockj Avatar
    sherlockj

    You ask that the SCC not be permitted to regulate the business of healthcare delivery while regulating the business of health insurance. You once told me that freedom abused is freedom lost. I am not for free market regulation, but we have not had a free market in healthcare delivery since 1973. Given that the state has actively created a system centered on regional monopolies, this is a plea to regulate those monopolies in the same manner we regulate public utilities that have been granted monopolies by the state. The fact that the boards and CEOs of some of those monopolies have abused their positions in restraint of trade has been reported in the press including this space for decades. They must be regulated, and there is no one in the Health Department assigned to read business plans much less financial results. VDH is not by design the place to look for regulation of the monopolies they have created. The SCC is.

    1. Acbar Avatar
      Acbar

      I think you’re both right. The SCC is the agency we already have that’s equipped to engage these tradeoffs head-on. And the SCC shouldn’t regulate both health facilities and health insurance. The misfit is regulation of the the insurance business, one that really could be spun off and regulated by another agency.

      Don’t forget that the SCC too has COPN authority when it comes to building facilities to go into a utility’s rate base. In my opinion they should be rejecting ALL new generation applications categorically under that authority, telling DE and the like: if it’s really such a good idea, go build it on your (shareholder) nickel for the competitive marketplace. It would be nice if hospital regulation were as simple.

      1. sherlockj Avatar
        sherlockj

        Insurance and provider cash flows are intimately connected. They need to be regulated together. Jim

  10. Steve Haner Avatar
    Steve Haner

    Okay, then drop the idea of adding a new regulatory layer at the SCC. If you are for market freedom, be for market freedom, and if the system gets overbuilt some investors need to go bankrupt (not get bailed out.). No more fat rewards for zero risk.

    And you are singing my song on how big dollars have corrupted the political process, allowing hospitals (practice groups, energy firms, green advocates, unions, mobbed up gambling operations, fill in the blank) to buy the legislation they want.

  11. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Just an observation that may disappoint you and to which Steve alluded: At the upcoming “reconvened” Session, the General Assembly cannot consider new bills. The purpose of this session is only to consider amendments to bills, including the budget, and any vetoes, including budget item vetoes, proposed by the Governor.

    The Governor could call a special session that would meet the same day as the Reconvened session. The Reconvened session would adjourn and then immediately the Special Session would commence. Then new bills could be considered.

  12. sherlockj Avatar
    sherlockj

    Doesn’t disappoint me. That is exactly what should happen.

  13. Steve Haner Avatar
    Steve Haner

    Which is it, Sherlock – too much freedom for the health care industry in the past or too much regulation? I tend to agree with you that regulation (the greedy kind, intended to create barriers to competition) has added to the problems now on display. But I do not for one second think, absent COPN, Virginia would now have a surplus of ICU beds for respiratory distress cases. We might have more ambulatory surgery centers, more imaging facilities, abundant plastic surgery outlets, but the capital would be seeking the highest returns, not the greatest social good. You don’t take all that capital and build out the hospital network you might need once or twice in a lifetime, to sit empty 39.5 years out of 40. When and if the crunch comes, hospital beds in big tents or the convention center will work just fine. Some plastic surgeon or neuro nurse may find themselves working ER intake for the first time since school.

    The General Assembly has demonstrated a great willingness to interfere in the decisions of the SCC with regard to the energy market and would do exactly the same if the SCC managed the health care industry. “No man’s life, liberty or property are safe while the legislature is in session” is the most true statement I know, perhaps second to the Golden Rule.

    If there is agreement on five or six things the GA can do to change the law short term, if it’s votes are needed to unwind the budget, then a limited purpose special session should be called. But only if there is 70-80% consensus on what to do. Conservatives on a tear to fix things can be just as dangerous as liberals would be.

  14. sherlockj Avatar
    sherlockj

    Easy answer Dick. To much regulation of capacity created scarcity and too much freedom for the winners of the COPN lottery to leverage their state-granted advantages in the presence of scarcity has driven up prices and strangled smaller competitors. We are short at least three acute care hospitals in Hampton Roads and three in Northern Virginia that have been applied for and denied by COPN in the past 20 years. Two long term care hospitals were denied in that same period. We would have 500 more ambulatory care centers if we, like Maryland, had exempted physician-owned ASCs from COPN. The respirators used in ambulatory surgical centers and office-based practices for anesthesia for outpatient procedures can and are being quickly converted for use as respirators for COVID-19 patients. We have 78 ASCs. Maryland has 523.
    Those are facts. Both of my positions on how to deal with those facts are conservative. 1. Virginia never should have interfered in the marketplace for new and expanded capacity in 1973 and should stop it. 2. Virginia needs to prosecute the monopolies it created for actions in restraint of trade. If there are not the votes for that, then we need a new General Assembly and Attorney General and we surely need to pass state campaign finance limits to change the dynamic in the capitol.

  15. sherlockj Avatar
    sherlockj

    Easy answer Dick. To much regulation of capacity created scarcity and too much freedom for the winners of the COPN lottery to leverage their state-granted advantages in the presence of scarcity has driven up prices and strangled smaller competitors. We are short at least three acute care hospitals in Hampton Roads and three in Northern Virginia that have been applied for and denied by COPN in the past 20 years. Two long term care hospitals were denied in that same period. We would have 500 more ambulatory care centers if we, like Maryland, had exempted physician-owned ASCs from COPN. The respirators used in ambulatory surgical centers and office-based practices for anesthesia for outpatient procedures can and are being quickly converted for use as respirators for COVID-19 patients. We have 78 ASCs. Maryland has 523.
    Those are facts. Both of my positions on how to deal with those facts are conservative. 1. Virginia never should have interfered in the marketplace for new and expanded capacity in 1973 and should stop it. 2. Virginia needs to prosecute the monopolies it created for actions in restraint of trade. If there are not the votes for that, then we need a new General Assembly and Attorney General and we surely need to pass state campaign finance limits to change the dynamic in the capitol.

  16. Steve Haner Avatar
    Steve Haner

    Okay, then drop the idea of adding a new regulatory layer at the SCC. If you are for market freedom, be for market freedom, and if the system gets overbuilt some investors need to go bankrupt (not get bailed out.). No more fat rewards for zero risk.

    And you are singing my song on how big dollars have corrupted the political process, allowing hospitals (practice groups, energy firms, green advocates, unions, mobbed up gambling operations, fill in the blank) to buy the legislation they want.

  17. sherlockj Avatar
    sherlockj

    We are in complete agreement on every point but one. I am not imprisoned by ideology. If we did not have the existing regional monopolies, I would not ask that the SCC provide oversight. Since we do, and they have proven by their actions to be scofflaws, we need them to be taken to court or regulated, ideally both. The AG has demonstrated no intention of acting, so we are left with regulation as a last resort. That is the world we have, rather than a world we would have wished for.

  18. sherlockj Avatar
    sherlockj

    We are in complete agreement on every point but one. I am not imprisoned by ideology. If we did not have the existing regional monopolies, I would not ask that the SCC provide oversight. Since we do, and they have proven by their actions to be scofflaws, we need them to be taken to court or regulated, ideally both. The AG has demonstrated no intention of acting, so we are left with regulation as a last resort. That is the world we have, rather than a world we would have wished for.

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