DHA to Carney: Don’t appoint hospital cost-review board

By Bradley Vasoli

In a letter to Governor John Carney (D) this week, the Delaware Healthcare Association (DHA) urged him to forego nominations to the controversial Diamond State Hospital Cost Review Board.

The DHA, an advocacy group formed by Delaware hospitals, argued that the commission will take its ultimate form during the upcoming administration of Carney’s fellow Democrat Matt Meyer, who will leave his job as New Castle County executive to become governor.

Legislators are considering adjustments to the new law that created the board and a lawsuit in the Court of Chancery may also affect its future.

“Therefore, please avoid potential confusion and uncertainty by enabling the next administration, legislative leaders, and the courts to resolve the critical issue before appointments are made to this board,” wrote DHA President Brian Frazee.

He concurred with the governor that rising healthcare costs are worrisome. He said his organization’s member institutions are working to curb them by focusing on primary care and other wellness inputs.

The new board will scrutinize hospital budgets and oversee changes for cost-efficiency, aiming to limit annual expense growth to around three percent. Despite the DHA’s request, Carney’s office said he is poised to move forward with nominations.

“The Governor has called the Senate into a special session to consider nominations for appointments that require Senate confirmation,” the governor’s communications staff said in a statement late Friday. “Nominations will be made public when they are submitted to the Senate.”

Dr. Christopher Casscells, an orthopedic surgeon who serves as the Newark-based Caesar Rodney Institute’s health policy director, often differs with the DHA, opposing their members’ use of certificates of need to monopolize Delaware’s hospital markets. But he said their stance on cost-review-board appointments makes sense and he believes the panel won’t succeed in controlling healthcare expenditures.

“The healthcare association wants to stymie the creation of the board because the healthcare association is a lobbying group for the hospitals and the hospitals simply do not want anybody looking at their budgets,” Casscells told Delaware Live. “They need to price how they price and they simply don’t want an amateur — and that’s what this would be; this would be amateurs — looking at their budget and saying, ‘No, that’s too much.’”

Casscells expressed skepticism that a top-down cost-cutting entity can impose affordability on Delaware’s healthcare system. For one thing, he said, the General Assembly created the Delaware Health Care Commission in 1990 and renewed it in recent years with a threefold objective: increase access to care, improve outcomes and lower costs.

By all three measures, he observed, it has failed. In less than two years, he recalled, that commission spent nearly $2 million on social events. He doubts another government board will have any better effect.

Secondly, he said the new three-person cost-review panel is structurally flawed because it will pay five-figure salaries, which would be uncompetitive for major healthcare stakeholders.

“You’re going to get somebody’s administrative assistant who’s bored or unhappy with the job they have working in a real job and wants a non-job and that’s going to be your expert,” he anticipated. “It’s consummately silly and it’s going to fail.”

Casscells said the commission may have the unintended consequence of worsening medical care in Delaware by introducing perverse incentives for fraud and graft through artificial cost control.

“You run into the law of supply and demand,” he said. “And it is immutable; it is an absolute truth. But you can sure as hell screw it up with a top-down attitude toward supply and demand and thereby create all sorts of other problems.”