Gov. Scott Orders Florida’s 33 Public Hospitals Reviewed for Possible Privatization
FlaglerLive | March 24, 2011
Saying he wants taxpayers to get their money’s worth in health care, Gov. Rick Scott issued an executive order late Wednesday appointing a commission to scrutinize the performance and costs of hospitals operated by local governments.
His Commission on Review of Taxpayer Funded Hospital Districts has nine months to study whether it is in the public’s best interest to have government entities operating hospitals at all.
Flagler County has no publicly-run hospital. The nearest is Halifax Hospital in Daytona Beach, where many Flagler County patients, including most of its maternity patients, receive their care.
- The Full Executive Order
- Floridians, Start Your Orwells: Rick Scott’s Buzzword-Assault on State Health Care
- Dismantled or Reorganized, It May Be the End of the Department of Health As We Know It
The governor was the chief executive of HCA/Columbia, a multi-billion dollar privately run hospital chain that competed with publicly run hospitals. Part of the thrust of Scott’s order is to explore whether publicly run hospitals should be competing with private hospitals to start with. “Many tax-supported and non-tax supported government-operated hospitals operate competitively with non-government operated hospitals while utilizing the benefit of taxes, enhanced Medicaid reimbursement and subsidies for losses, and in some counties, have acquired the assets of competing entities,” the executive order reads, implying disagreement with such arrangements.
“Many taxing authorities in Florida and in other states have divested hospital assets to independent entities through sale or lease, and such hospitals have thrived as private entities while continuing to serve the poor,” the order reads.
Beyond that, the panel is to look for the most effective model of providing health-care access for poor people.
“We’re spending a lot of tax dollars to do this and I want to make sure that the dollars are spent well,” Scott said at an appearance Wednesday afternoon at the Capitol. “Are we getting return for those dollars? Is it helping us with reducing the costs of health care?”
Business groups immediately praised Scott’s action. Scott appointed Dominic Calabro, president and CEO of Florida TaxWatch, an independent group that looks for ways to save money, to chair the commission.
But the panel will discover that public hospitals tend to provide good value, said Tony Carvalho, president of the Safety Net Hospital Alliance of Florida, a group that includes public and non-profit teaching hospitals.
They have to, he said, because they are required to prove their worth each year to elected officials or to the taxpayers directly.
“I certainly welcome any review of their operations and efficiencies …and the benefit their communities receive,” he said.
The order immediately brings to mind financially ailing Jackson Memorial, the nation’s third largest public hospital. But a search on the Florida Hospital Association web site indicates there are 33 publicly owned hospitals in the state, not counting the VA and state-owned institutions.
And they don’t look much alike.
“No two of them are the same,” said Linda Quick, president of the South Florida Hospital and Healthcare Association. “To come up with a position that would apply to all of them is going to be difficult if not impossible.”
Some are owned by county or city governments, while others are operated by independent elected bodies that have taxing authority – special hospital districts.
Some public hospitals – notably Lee Memorial Health System in southwest Florida – don’t even get local tax revenue, while some taxing districts distribute money to hospitals without owning or operating them.
Consider the difference between Jackson Memorial and suburban Coral Springs Medical Center. One of four hospitals in the public Broward Health system, Coral Springs has a lower percentage of indigent patients than many private hospitals, including some for-profits.
Wading into the dispute on what hospitals are paid is bound to remind Floridians that Scott resigned under fire in 1997 as CEO of the Columbia/HCA hospital chain, which he led for 10 years, after it became public knowledge that it was under federal investigation for Medicare fraud.
The company eventually paid $1.7 billion in civil fines, but Scott was never charged with criminal wrongdoing. He has said he didn’t knowingly participate in fraud but admitted he should have paid more attention to billing.
The recommendations in Wednesday’s executive order track those made by Scott’s transition team for health and human services following the election. Its chair, Alan Levine, said Wednesday night that Scott has “put forth a thoughtful process” for answering the questions that crop up every year on how to distribute money for care of indigent uninsured patients.
The process always ends up in a “food fight,” said Levine, who is now a regional president for Health Management Associates, an investor-owned hospital chain. The governor’s commission is a better way to go about it, he said.
From the executive order: the commission’s purpose:
A. Determine, based on objective data, whether costs in government-operated hospitals are higher or lower in comparison to similar non-government-operated hospitals offering similar services, and whether, assuming there is such a cost difference, it results in higher or lower Medicaid, Low Income Pool or other reimbursement, compared to other hospitals that provide care to the poor, and whether spending would be reduced or increased if the hospitals were operated at the same levels of efficiency.
B. Determine if there are better or worse outcomes on national measures of quality, such as the CMS Core Measures, in government-operated hospitals compared to non-government-operated hospitals.
C. Determine if models exist in Florida and other states where local taxing authorities have created innovative programs and access for the poor without operating hospitals and instead have created programs where the funds follow the patient to the hospital or outpatient service closest to their community.
D. Gather data and the various methods of providing access to the poor from each hospital district in Florida to determine the most cost-effective method for providing outpatient and inpatient hospital services to the broadest population possible and recommend the best models to the Governor and Legislature.
E. Determine if the existing governing-body model of the various government-operated hospitals optimizes the best governance practices, ensures proper oversight with accountability for the actions of board members, has had any violations of charter or governance rules by board members, has complied with the government-in-the-sunshine laws, and has consistently acted in the best interest of the primary shareholder
— the taxpayer.
F. Determine if taxpayer-funded hospital districts are using employment models for physicians wherein the physicians are being paid outside the norm for similar non-employed, non-tax-subsidized physicians in the geographic area, and whether other forms of compensation, such as medical directorships, are being used, and subsidized by taxpayers, for the purpose of competing with private physicians, and not-for-profit
and other community hospitals which enjoy no such tax-subsidy.
G. Determine the best mechanism for transition of government-operated hospitals to more appropriate governance models based on the experience of the many public and government-operated hospitals that have implemented such conversions. Determine, if appropriate to convert government-operated hospitals to different governance models, what the process should be for such conversion, provided that any
such process should optimize the return for the taxpayers on the value of the assets and should be transparent to the public.
Members of the commission:
Dominic Calabro (Florida Tax Watch CEO)
J. Scott McCleneghen (Managing Senior Vice President, City National Bank of Florida, Miami)
Jacob C. Jackson (Pompano Beach attorney)
Marshall Kelley (Tallahassee health care consultant)
Dwight Chennette (chief executive officer of the Palm Beach County Health Care District)
Brad Dinkins (Ocala Realtor)
Randall McElheney (Panama City pharmacist)
R. Paul Duncan (chairman of the Health Services Research, Management and Policy Department at the University of Florida)
At the discretion of, and by appointment of the Senate President, a member of the Florida Senate may serve as an additional member of the Commission. This member shall serve at the pleasure of the Senate President.
Read the full executive order.