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Health system transparency: Lawmakers need more facts about hospital finances

As the pandemic persists, it is becoming apparent that legislators and their communities deserve more insight into how our state’s hospitals are being run.

This story appears in 2021 legislative session preview.

Wa nurse transparency

The COVID-19 pandemic has put a spotlight on the inner workings of hospitals across the country. Last spring, reports revealed that at the same time some hospitals and nonprofit health systems were laying off essential workers, they continued building hedge funds in the billions. As the pandemic persists, it is becoming apparent that legislators and their communities deserve more insight into how our state’s hospitals are being run.

Hospital profit grew in 2020

Although many people are aware that health care spending has soared over the last several decades, few Americans know about the expanding role of private equity in the health care system. Despite the economic turmoil facing our communities during the COVID-19, pandemic many hospitals are not just maintaining profit but actually growing it. According to a 2020 PitchBook Report, U.S. private equity deals in the health care sector totaled $8.5 billion between April 2020 and July 2020. This is especially troublesome considering that during that same period, hospitals across the country were citing "revenue shortfalls," instituting large layoffs and refusing to pay frontline workers hazard pay.

In May, The New York Times reported that Providence Health System, the country’s largest and richest hospital chain (as well as the owner of 35 hospitals in Washington state), is holding $12 billion in cash. In a typical year, this health system generates $1 billion in profits — which they invest in Wall Street hedge funds. Providence also received $509 million in government assistance funds from the federal CARES Act intended to support hospitals during the COVID-19 pandemic.

But not all hospitals are the same. Although Providence may be operating in the billions, we know that smaller hospitals in our state are in desperate need of financial support from the government. It is crucial that the Washington State Legislature require more financial transparency from our hospitals. Nurses, patients, communities and legislators deserve the facts.

2021 Legislative Session

Last year, Representative Nicole Macri (43rd LD) introduced House Bill 2036: Concerning Health System Transparency. The bill passed out of the House, but never made it to the Senate floor.

This year, Rep. Macri plans to introduce similar legislation; only now, the bill will also address the rising concerns about hospital profit during the COVID-19 pandemic (it will also have a new bill number). This year’s bill will:

  • Require hospitals to provide more detailed reporting on their operating finances.
  • Require hospitals to provide more information on the impact of community benefit dollars on the communities they serve.
  • Require health systems to provide the State with more information on the transactions taking place between facilities during acquisitions and mergers.
  • Require hospitals to report demographic data of the communities they serve. Communities of color have suffered from significant disparities in our health care system; this problem is only worsening and becoming more urgent during the pandemic.

How can you help?

The Washington State Legislature’s 2021 Regular Session will look a lot of different from previous years. Most legislative work is expected to be conducted remotely. This provides an unprecedented opportunity for nurses who wouldn’t normally have the time to drive to Olympia to weigh in on legislation to do so from the comfort of their homes. Throughout session, the WSNA Legislative and Health Policy Council will be looking for nurses to share their stories and experiences with legislators as it relates to their own hospital’s finances.

CHI Franciscan and Virginia Mason merger

In July, CHI Franciscan and Virginia Mason Health Systems announced plans to form a joint operating company. The expanded company would include 12 hospitals and more than 250 treatment sites in the Puget Sound and Yakima regions.

This announcement comes eight years after Swedish Medical Center and Providence Health & Services merged. That merger led to a decline in services across the state for reproductive health care, LGBTQ services and end-of-life care. In the United States, one in six hospital beds are in Catholic facilities. The rate is even higher in Washington state, where 41% of hospital beds are part of religious-based hospital systems. If the merger goes through, a total of four cities in the state — Bellingham, Centralia, Walla Walla and Yakima — will have only a Catholic hospital.

In anticipation of a continued decline in crucial health services under the merger, more than 50 state legislators wrote and signed a letter to Virginia Mason’s CEO and Board of Directors. These legislators urged Virginia Mason to continue to provide the full range of reproductive and end-of-life care services under the new merger.

On Oct. 7, nearly a dozen WSNA members at Virginia Mason met with the chair and vice chair of the House Health Care Committee, Rep. Eileen Cody (34th LD) and Rep. Nicole Macri (43rd LD), as well as with Senate Health & Long Term Care Committee member Sen. Manka Dhingra (45th LD). WSNA members passionately shared their concerns about the merger.

In late October, Yakima Valley Memorial Hospital’s Board of Directors voted to end the hospital’s affiliation with Virginia Mason. Yakima Memorial’s board cited concerns about the upcoming CHI-Franciscan/Virginia Mason merger as the reason for withdrawing affiliation from Virginia Mason. After news of the merger, Yakima community members and providers from across the region shared concerns with the board about the potential impact on local care. The removal of affiliation is likely to take place by February.

As our state continues to see more mergers and acquisitions, WSNA will continue to hold hospitals accountable for their financial data and to provide the full range of quality care to their communities.