NewsLanc’s response to President of Lancaster General Health

March 24, 2010

To: Thomas E. Beeman, President, Lancaster General Health

From: Robert E. Field, Publisher, NewsLanc

Dear Tom:

Below please find excerpts from your letter to me of March 16^th along with our related questions and comments.

NewsLanc awaits response to the following requests:

“Kindly provide us with a list of the county-wide organizations to which LGH has  provided financial support to during 2007,  2008 and 2009, including the amounts LGH has donated. (Just listing names without the amounts serves little if any purpose, since an important issue has to do with how much LGH contributes compared to how much LGH earns.) If you do not have information from all of these years readily available, please send us what you have. If possible, follow up with the balance.”

“We are seeking LGH’s balance sheet and statement of cash flow for the past three reported years.”

Cordially,

Robert

1) “You wrote: Because LGH can charge more to insurance companies, insurers in turn charge more to Lancastrian for coverage. So LGH’s huge profits are coming from our pockets. 

We can’t answer for what insurers charge their customers. What we can say however is our charges are comparable to other Lancaster County hospitals, and in many cases are lower than our two for-profit hospitals…. According to the Pennsylvania Health Care Cost Containment Council’s Hospital Performance Report 2008, Lancaster General Hospital’s charges were lower than Lancaster Regional Medical Center in 18 out of 27 procedures.”

NEWSLANC: The state report to which you refer lists the average prices which hospitals place on their services for treating a few dozen more or less typical procedures. Are you aware that the report cautions that the figures are not necessarily what patients actually pay?

Isn’t what patients actually pay determined by their insurance coverage, which is worked out between the healthcare provider—in this case LGH—and the insurance companies? While LGH is indeed not responsible for what the insurance companies charge, LGH does work with the insurance companies in determining that bottom line figure?

Doesn’t LGH’s relative market dominance enable it to negotiate higher rates for reimbursements than would otherwise be the case?

Unlike in cities where there are two or more hospitals of relatively equal size from which to choose, would insurance companies or individuals be likely to purchase insurance protection that did not provide coverage at LGH?

Don’t the insurance companies in turn pass on their expenses in pricing their policies?

2) Furthermore, we have no desire to “crowd out” Ephrata Community Hospital. Lancaster General Health and Ephrata Community Hospital continue to look for ways to partner in ensuring healthcare services are available in one of the fastest growing regions of our community.

NEWSLANC: Kindly provide us with evidence that the management or board of trustees of Ephrata Community Hospital has expressed an interest in being a “partner” of LGH in the location that LGH seeks to develop within three miles of the Ephrata hospital.

Our article of September 16, 2009 headed “Ephrata Hospital already has plans to handle population growth” reports “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’.”

3) You wrote: LGH, a non-profit ‘public charity’ is one of the least charitable hospitals in the state!   We know not what it is doing with its vast earnings, but we do know they are not being directed adequately towards local public health and education.

This statement is categorically false. Our contributions to our community in charity care, free healthcare services, financial assistance and cash donations to government and school districts exceed other hospitals in our region

NEWSLANC: By “region” are you referring to “Region 5” which encompasses York, Lebanon and Lancaster Counties?

Are you denying: LGH has a much lower ratio of charity care within its uncompensated care total than the state average ($50 million unreimbursed plus $7 million charity = $57 million, of which charity was 12%); LGH’s percentage of its total revenue that went to uncompensated care is one of the lowest in the state and second lowest in this region (1.55% of revenue in FY2008, only barely above Heart of Lancaster at 1.52%); State statistics show LGH’s level of charity about half of the average of hospitals statewide;  LGH has one of the highest positive operating margins and highest total margins of any hospital organization in the state of PA, in addition to some of the highest net patient revenue figures?

4) Everything Lancaster General Health earns is reinvested back into our system, unlike for-profit hospital chains that pay dividends to investors, or use profits to acquire hospitals in far-away states. Our dollars are reinvested locally into our facilities, people and in new technology to ensure high-quality healthcare is available now and in the future. For example, hospitals of our size and scope require approximately $50 million annually to replace capital equipment throughout our health system, and federal mandates to establish an electronic medical record at LG Health will require us to spend more than $130 million over the next three years.

NEWSLANC: We note that your argument for non-profit hospitals is similar to the case “liberals” make  for covering the entire population under single payer health insurance, such as an expanded MediCare.

Isn’t the $50 million expended for capital improvements annually amortized over the years, and thus roughly represented as an equal amount of “expenses” on your operating statement each year? NewsLanc has not raised a question of the efficiency of LGH operations. Rather NewsLanc questions why LGH does not spend more of its $110 million in “surplus” or “profits” for public health and educational purposes. We await your response to our core concern.

5) Certainly, if we did not place a priority in getting the uninsured enrolled in Medicaid, our charity care number would be much higher.  Enrolling patients in Medicaid is to the patient’s advantage, as it assures them access to medications, physician visits, and other critical services they may require outside of hospital settings.

NEWSLANC: Are you suggesting the other hospitals throughout the state are not seeking compensation for those who qualify for Medicaid but are not enrolled?

6) A great way to start learning would be to download our many Community Benefit Reports at http://bit.ly/cKKcJw

NEWSLANC: The URL site does not provide dollar amounts of aid to local organizations or the hospital’s own public health efforts. We requested that information last weekend and have not yet received a response. 

7) We use national, state and local health data, such as mortality and morbidity data, risk factor surveys, Healthy People 2020 goals, and many others, to objectively identify our community’s actual health priorities. Those priorities are: Increasing healthy weight management , Reducing tobacco use , Improving access to primary care for the growing number of medically underserved throughout Lancaster County.

NEWSLANC: Rick Kastner, Executive Director of the Lancaster County Drug and Alcohol Commission, estimates there are 5,000 to 10,000 heroin addicts in the county.

How do you justify LGH’s stated refusal to donate money to maintain a syringe exchange, even now that the sale of syringes has recently been deregulated? Doesn’t prevention of the spread of HIV/AIDS and other diseases reduce the need for LGH services, especially since the type of treatment that you represent is under compensated through Medicaid? Don’t syringe exchanges refer patients for treatment, thus helping to reduce the number of addicts and restore them as productive citizens and caring family members?

How do you justify LGH maintaining a clinic for medical treatment of heroin addicts only one afternoon a week with only one physician present?

Would not those treated qualify for Medicare or Medicaid?   

8 ) You wrote: There is total lack of transparency, with media and public being banned from all LGH trustee and committee meetings except for the annual public meeting, and the one goes unnoted and unreported by the Lancaster press. (It was last November, but not a word was printed about it before or after.)

This is also untrue. Our financial performance, clinical outcomes, charges, and infection rates are publicly reported on a regular basis by several independent agencies and via our website. We publicly issue two Community Benefit Reports and send monthly Community Benefit Updates via email to more than 9,000 people to communicate our efforts in improving the health and well-being of Lancaster County. Furthermore, we are regularly featured by the local print and electronic media, which write both positive and negative stories. As for the LGH Trustee meeting, it was advertised in Lancaster Newspapers and members of the public attended.

Aren’t many of these reports required by law?

More importantly, what relevance does information released by LGH have to do with a public dialog engendered by open board and committee meetings? How can LGH be critiqued if it only holds one meeting a year (out of hundreds) open to the media and general public?

Are you suggesting that “monthly Community Benefit Updates”, which some would refer to as public relations propaganda, are adequate to take the place of public discourse?

9) You wrote: Finally, management at LGH is totally self perpetuating, with current trustees choosing future ones. There is no public input.

Management isn’t governance. At LG Health, management serves at the pleasure of our community-based Board of Trustees. Our Board of Trustees is “the public.” The board is comprised of volunteer civic and business leaders from our community. They help guide the creation of our health system’s vision and strategy, which is carried out by our leadership team and our more than 7,400 employees.

The Board of Trustees gains perspective and additional public input through several ad hoc committees, which include dozens of community members from throughout the county. As is the case with other public charities, our Board of Trustees regularly selects members of the community to serve on the board.

Are not members of the Board of Trustees and “ad hoc committees” selected by LGH rather than appointed by government officials, local social service organizations, or elected by the public? How is this not “self perpetuating?”