At present, Pennsylvania is one of fourteen states in the US that do not operate a Certificate of Need (CON) process to regulate the introduction of new medical services or facilities—like the one proposed by Lancaster General for West Earl Township, about three miles away from the well functioning Ephrata Community Hospital. But, if State Representative Phyllis Mundy (Luzerne County) has her way, CON requirements will return to Pennsylvania, perhaps as early as next spring.

The Health Care Facilities Act (HB247), sponsored by Mundy last February, would reintroduce the CON process, a move that Mundy has called “critical to helping rein in the escalating costs of health care.” The bill is currently being considered by the House Insurance Committee. In her April testimony before the committee, Mundy stated that “one of the significant health care cost drivers is unnecessary duplication of expensive medical technology and services.”

Mundy asserted that the removal of CON requirements has sparked a costly and unnecessary “technological arms race” among Pennsylvania’s healthcare providers. Since the State’s CON program expired in 1996, Mundy noted, the number of licensed ambulatory surgical centers in Pennsylvania increased by 400%, from 44 to more than 230.

“These costs are ultimately passed onto consumers,” Mundy said.

Elaborating on the purpose of this bill, Mundy said that it would serve to

“…reconfigure our health care system by considering community health care needs on a regional basis so that capital expenditures on medical technology can be prioritized for certain areas but limited where the market is already saturated….Opponents of CON will tell you that the duplication of these health care services is about ‘choice’ and ‘competition.’ I believe it’s about profit. We need to recognize that competition is not always the solution; sometimes it’s the problem. And in this case, it’s driving people who need health insurance out of the marketplace.”

To reign in these excessive costs, House Bill 247 would:

• Establish local review committees to review CON applications and provide recommendations to the Department of Health
• Require applicants to demonstrate that there is not a more cost effect alternative to providing their proposed services
• Require applicants to demonstrate that their proposed service would not adversely affect healthcare costs
• Involve the Pennsylvania Health Care Cost Containment Council in the review process

The CON process would be engaged for any hospital-based improvement or project costing more than $2 million. (Some estimates for LGH’s proposed West Earl facility have reached as high as $155 million.)

According to Art McNulty, Executive Director of the Insurance Committee, HB247 would “absolutely” relate to a project like the one proposed for West Earl. McNulty even added that the scenario sounds quite similar to one that has occurred in Representative Anthony DeLuca’s Allegheny County district. DeLuca is Chair of the House Insurance Committee.

Not personally familiar with the LGH plan or the service capacity of Ephrata Community Hospital, McNulty qualified that a CON review process could, under certain circumstances, approve a project that did not appear reasonable at face value. For example, McNulty said, if LGH were proposing the introduction of particular services and technologies unavailable at Ephrata Community, a CON would likely be granted.

1) In the interest of transparency, improved performance and since it is a Public Foundation, LGH should open its board and committee meetings at least once every three month to the public and media so that proceedings can be observed, questions posed and issues discussed.

2) Three members of the Board of Trustees should be elected by the public to four year terms.

3) In recognition that LGH’s huge profits (well over a hundred million dollars each year) are in large part a result of its market dominance, at least 20% of earnings should be spent each year towards public health and for education. An extra $25 million would make a huge difference in the quality of health and life in our community.

4)  LGH should hold three public forums over the next year to explain and hear comments about its proposal to build a hospital within three miles of Ephrata Community Hospital in West Earl Township. We have not encountered a single person who doesn’t consider the notion bizarre.  Minimally, explanations and public discussions are in order.

In 2011, Lancaster General Health will discontinue health insurance benefits for all part-time employees working less than 20 hours a week. Furthermore, effective immediately, the county’s largest employer will no longer offer such coverage to future part-time hires working less than 20 hours. According to LGH Public Relations Director John Lines, the decision will affect 3% of the not-for-profit’s 7,000 employees, which approximately totals 210 working individuals.

NewsLanc was notified of this development late last week through the comment of a frustrated reader:

“Lancaster General Hospital just sent out a letter telling many of its part-time employees that they are getting kicked off of the hospitals health insurance plan at the end of next year.

“For all the surplus money they have and how much they spend on fountains and statues, they WON’T provide health coverage to some of their staff.

“The letter came as a complete surprise to people. Nobody asked the affected employees what taking away the insurance would do to them. The human factor was never considered.

“Executives and managers seemed annoyed at having to hear what this decision will do the families victimized by this shameless greed. The attitude displayed to the staff is basically ‘Let Them Eat Cake.’”

The “surplus money” mentioned by this reader amounts to $113 million dollars for the last fiscal year.

To verify the reader’s report, NewsLanc sent an inquiry to Lines, which included the following questions:

1. What prompted this decision?
2. In light of LGH’s $113 million surplus, why is the company cutting back on employee benefits?
3. How much budgetary savings does LGH expect to earn by eliminating this expense?

Lines’ response was not exhaustive, but did touch on the basis for LGH’s decision. According to Lines, “Each year, we compare the benefit practices of regional and national healthcare organizations. This year’s results showed it is highly unusual to offer health benefits to employees working less than 20 hours a week.”

According to Public Relations Director John Lines, Lancaster General is under no legal requirement to demonstrate a public health need for the proposed West Earl inpatient hospital and medical center. The facility would be located less than 3 miles from Ephrata Community Hospital, which runs at a capacity lighter than the national average for hospitals of its kind.

Last week, NewsLanc reported that, with no Certificate of Need (CON) program in Pennsylvania, the Department of Health would not play a role in verifying the public need for LGH’s proposed facility. Following that report, NewsLanc contacted Lines to determine whether there remained any other regulations similar to a CON. Through an email inquiry, NewsLanc asked:

“With no State-level Certificate of Need program in place, are there any other government agencies, programs, or authorities that must verify the need for a new medical facility such as the one proposed for West Earl?”

In reply, Lines simply answered, “No.”

In a phone interview with Joanne Salsgiver, Director of the DOH Division of Acute and Ambulatory Care, NewsLanc asked if the State would hold any form of regulatory veto over a health facility that blatantly duplicated nearby services. Salsgiver’s answer was simple and to the point: There is no Certificate of Need program in the State of Pennsylvania.

Pennsylvania is one of fourteen states in the US that do not operate a Certificate of Need (CON) program. In the other 36 states, such programs serve to assess the feasibility and public need for any proposed health care facility. But without a CON requirement in place, the State Department of Health (DOH) will hold no authority to judge the worth of Lancaster General Hospital’s proposed facility development in West Earl Township, less than 3 miles away from Ephrata Community Hospital.

According to an article posted by the National Conference of State Legislatures,

“The basic assumption underlying CON regulation is that excess capacity (in the form of facility overbuilding) directly results in health care price inflation. When a hospital cannot fill its beds, fixed costs must be met through higher charges for the beds that are used. Bigger institutions have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual needs.”

The ultimate value of these CON laws, however, has been a topic of debate for decades. Arguments have generally conformed to the usual ‘regulation versus deregulation’ protocol, with CON supporters contending that open market forces may not always seek the best interest of public health, and with CON opponents alleging that government regulation decreases competition and drives up costs.

Pennsylvania had a CON program of its own until the State Legislature allowed its legal provision to expire in 1996. While the program was in place, PA code required that “the construction, development or other establishment of a health care facility or health maintenance organization” be authorized by the Department of Health with a CON.

The CON review process scrutinously asked the question of whether a proposed medical facility would actually benefit public health in its area of service. Among many others, the assessment included the following considerations:

• “Whether there is any appropriate, less costly or more effective alternative method of providing the services available.”
• “Whether the proposed service or facility is compatible with the existing health care system in the area.”
• “Whether it will have an inappropriate, adverse impact on the overall cost of providing health services in the area.”
• “The impact of the costs of providing health services by the applicant resulting from the construction”
• “That in the case of new construction, alternatives to new construction such as modernization or sharing arrangements have been considered and have been implemented to the maximum extent practicable.”

None of these considerations, however, will be authoritatively weighed against LGH’s West Earl project. Meanwhile, Ephrata Community Hospital currently operates at a lower capacity than the national average for hospitals of its kind. An official from the existing Ephrata Hospital recently told NewsLanc that the institution not only provides adequate capacity for the local population, but also holds a long-term strategic plan to expand with future population growth.

In response to a NewsLanc request to attend the board meetings of Lancaster General Hospital, a high ranking LGH official responded as follows:

“Lancaster General Health and Lancaster General Hospital are both considered public charities under the IRS code. As noted in a prior email to NewsLanc from John Lines, our Board meetings and Committee meetings are not open to the public other than the one public meeting of the hospital board that is held each year.”

We don’t question the legal correctness of their decision, but conducting the public’s business behind closed door is worrisome, especially when partially through market dominance LGH is able to extract well over a hundred million dollars a year in profits from county residents.

We will be examining this issue further in the future. But for starters, we recommend that a county commissioner, the mayor of Lancaster, and the chair of the School District of Lancaster be made ex-officio members of the LGH board.

Then the public would have a voice in these insular proceedings, now conducted by board members who were selected by board members, and who may be unduly lavishing funds on Lancaster General Hospital rather than contributing to public health, education, and social safety net programs that are languishing for lack of adequate funding.

According to Ephrata Community Hospital (ECH) spokeswoman Joanne Eshelman, “We regularly evaluate our facility needs and have a plan in place to further develop our main hospital campus to meet the needs of this community.”

This fact may come as surprise to the public, considering Lancaster General Hospital’s intention to develop an inpatient hospital and medical center within three miles of ECH’s central facility.

A primary justification for LGH’s proposal is an anticipated five-year population increase of 10,000 in northeast Lancaster County. Yet Eshelman says that Ephrata’s strategic plan accounts for the needs that will come with anticipated population growth.

According to Eshelman, the hospital’s occupancy rate averages 64%, nearly 4% lower than the national average for non-profit hospitals as of 2003.

She said that on an infrequent basis, the Ephrata Community’s emergency department has to “divert” patients to a nearby hospital when no beds are available. Between September 2008 and August 2009 the emergency department averaged a monthly seven hours of “divert mode,” with some months requiring no such admittance.

ECH has already developed plans to expand their emergency department; however, the project was temporarily suspended during the last fiscal year because of the economic downtown, according to the spokesperson.

Eshelman declined to comment directly upon Lancaster General’s plans to expand into nearby West Earl Township.

Can you recall the last time you voted for members of the board of directors / trustees of Lancaster General Hospital? Can you even find who they are on LGH’s web site?

Yet as members of the community, we all pay a health care premium, either directly or through our insurers, to LGH due to its near monopoly position which enables it to be the third most profitable hospital in the state and to annually earn well over a hundred million dollars. LGH’s dominance of local health care generates higher healthcare prices, which is little different than a tax on those using its services.

NewsLanc has reported extensively on the finances of LGH and our research and interpretations have been tacitly confirmed. We do not object to LGH earning vast sums, even when at our expense. We do object to the secretive and self-serving ways that LGH spends its profits because we do not believe they are consistent with the best interests of the public—the owner and supposed beneficiary of this foundation—or consistent with its stated mission: “To advance the health and well-being of the communities we serve.” Note “well-being.”

According to the Sunday News lead article “LGH plows ahead on hospital near Ephrata” of September 6th “LGH spokesman John Lines says an outpatient center probably will be built first, then an inpatient hospital.”

Is a hospital complex in Ephrata indeed the best use of LGH profits? Are the downtown Lancaster hospital and the suburban Women’s Hospital at the suburban ‘campus’ overcrowded? Are there wiser and more economical methods for shortening or eliminating stays to make room for others?  Are there ways to make use of capacities at Lancaster Regional and Heart of Lancaster?

As an example of what LGH could be doing with a tiny fraction of its surpluses: A half a million dollars a year in funding for an expanded Suboxone clinic would turn 500 drug addicts into productive members of the community and strengthen family ties. A one-time two million dollar contribution would enable the Lancaster Public Library to be totally renovated and a hundred thousand dollars a year would go far in sustaining and expanding the downtown library’s services. A quarter of a million a year would help put the Pennsylvania Academy of Music on a solid financial footing.  A larger contribution to the City and School District of Lancaster would benefit everyone in the county, resulting in a more vibrant and healthy downtown and better educated  inner-city youngsters.

But whether you agree with these causes or not, the real issue is: “Who is making the decision on how the public’s money—LGH’s profits—is being spent?”

We cannot even find the names of the directors or trustees on the LGH’s web site. We don’t know how they are appointed or elected.

But NewsLanc intends to find out. And it is time for the thinking public to recognize that what happens at LGH is as important to the community as what occurs a few blocks away at the County Office Building and City Hall.

Less than 500 of the estimated 5,000 to 10,000 heroin addicts in Lancaster County can obtain relief from addiction, in large part because physicians are unwilling to treat them out of greed and indifference.

Until a few years ago, there was no methadone clinic in Lancaster. Today Addiction Recovery Systems treats over 300 clients and enables them to return to near normal life with family, friends and jobs.

A breakthrough with even greater potential came with permission for physicians to prescribe buprenorphine, usually in the form of Suboxone, which is as effective as methadone for most patients and can be obtained with a prescription from pharmacies rather than through a clinic.

According to Wikipedia and confirmed by NewsLanc: “In the United States, a special federal waiver is required to prescribe Subutex and Suboxone for opioid addiction treatment on an outpatient basis. However… an eight-hour course is all that is required. Each approved prescriber is allowed to manage only thirty patients on buprenorphine for opioid addiction as outpatients…”

Hundreds if not thousands of Lancaster addicts are unable to obtain buprenorphine treatment. Why? Addicts are not perceived as attractive patients and often do not have the ability to pay or qualify for third party payment.

Does not the medical profession have an ethical responsibility to provide treatment for all who seek it?

Should not publicly owned Lancaster General Hospital lead the way in providing such services for the hundreds and possibly thousand who desire it?

To what more appropriate use can Lancaster General Hospital put two or three million dollars of its $113 million in earnings?

The irony is that treatment of addicts ultimately saves the public far more than it costs, and even can prove “profitable” for the hospital because it reduces the not fully remunerated high costs of treatment of health problems resulting from addiction.

If a single qualified heroin addict is unable to obtain treatment upon request, it is a disgrace. How much more shameful is depriving hundreds and possibly a thousand of the opportunity!

In the Sunday News May 10 lead article headed “$113 MILLION SURPLUS IS A DECREASE FOR LGH”, the newspaper leans over backwards to paint Lancaster General Hospital as a great benefactor of the city and the community while struggling to minimize the implication of so much public money being directed not necessarily in the public’s interest.

The paper quotes President and CEO Thomas Beeman as saying “Things have changed dramatically in the past year. We’re reflecting the rest of the economy.” For the sake of the national economy and especially the auto industry, would that it were true!

As a series in NewsLanc exposed, LGH has been the second most profitable hospital in the state and has one of the lowest levels of contribution to charity.

As also reported and affirmed by a reliable LGH source, the hospital’s dominant position in the Lancaster market place enables it to negotiate higher fees from insurance companies than is possible elsewhere.

However, when insurance companies have to pay higher costs, they need to charge more for their policies. The companies will make their mark up and thus their profits; but the brunt of the high prices falls upon the policy owners, who are we Lancastrians.  So we aren’t talking about LGH’s money; it’s a non-profit institution. We are talking about our money: the public’s money!

Here is some sycophantic misdirection from the article:

“Lancaster Mayor Rick Gray lauded Beeman and LGH. ‘When I talk to other mayors and tell them how much they contribute, their jaws drop.’” If Gray tells them how much LGH is making due to its dominant health care position, the other mayors would probably keel over!

“More than $25 million of the surplus will go to replacing and upgrading equipment.” When equipment is replaced and upgraded, the costs are depreciated over several years and are deductions from profits.  The $113 million this year is after, not before, the costs of “replacing and upgrading equipment” over the past years.  In future years, LGH will charge off this year’s outlays.

“LGH spent more than $50 million last year on care for low-income and uninsured patients.” That would have been expensed, so the $113 million is after allowing for such services.

“The hospital spent more than $1 million last year on wellness programs targeting, among other things, obesity and smoking.” Commendable, but also treated as an expense; so not out of the $113 million profit.

“The hospital offers financial assistance on a sliding scale.” Again, that is expensed, so the $113 million profit is after providing such services which are typical of all hospitals.

The Sunday News goes on: “Beeman said that pharmaceuticals represent one-third of LGH’s costs and cited unnecessary emergency room visits as an ‘inefficient’ way to seek care.” Absolutely! But those inefficiencies are treated as cost and do not come out of the $113 million profit.

Also reported “The hospital distributed nearly $1.9 million in grants last year, of which more than $100,000 went to United Way of Lancaster County.” Isn’t part of that allowed as an expense?

Alex Henderson III, vice chair, is quoted as saying “All the money we make goes back into the community.” True enough, but the issue is how much is bloated compensations, pensions, perquisites, and spending on plant and equipment which should not have the highest priority?

For example, Rick Kastner, Executive Director of the Lancaster County Drug and Alcohol Commission, reports that less than 500 of the 5000 to 10,000 heroin addicts in the county are able to afford or, even if they have the money, obtain treatment.  Would the community not be better off if LGH only made $110 million but another thousand addicts received health care and were able to become constructive and law abiding members of their families and of the community?

This article is not meant to be a put down of the good people of General Hospital who provide commendable expertise and services. Rather, NewsLanc believes that LGH is the one institution that best reflects the needs of the community and has the potential for relatively selfless leadership in the future.  The other four local titans – Franklin & Marshall College, Fulton Bank, High Industries and the Lancaster Newspapers- are duty bound to stockholders or trustees to best represent their special interests.  And they certainly are so motivated!

NewsLanc does believe that LGH has a responsibility to utilize its earnings for the best overall interests of the community from which its disproportionate profits spring.  It could well afford to donate $25 million to $50 million of the $113 million towards public health and education. Furthermore, over time, the gifts would actually earn profits as a result of a healthier and more prosperous community that would be better able to pay its bills without subsidies and charity.

It’s time for Rick Gray, United Way President Susan Eckert, and the Lancaster Newspapers to stop blowing kisses to LGH (to put it politely) for the crumbs LGH allows to fall from the table and call upon the health care system to do far more for the good of the public, which not only is the source of its revenue, but owns the place!