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Daughters of Charity Deal Carries Warnings for the Future of Health Care

December 16, 2015 By Susan Shelley 1 Comment

What would happen to our health care system if we took the advice of some politicians and turned it into “Medicare for all,” a single-payer plan?

Right now in California, there is a story of hospitals, nuns, hedge funds, corruption, the state Attorney General and union bosses that may hold the answer to that question.

The story begins in Paris, where the Daughters of Charity religious order was founded in 1633, dedicated to serving the poor. The Daughters came to America in the 1800s, and by 1991, their highly respected nationwide chain of nonprofit Catholic hospitals had $3.1 billion in annual net revenues and a top credit rating.

Six hospitals in California, including St. Vincent Medical Center in Los Angeles, became the Daughters of Charity Health System in 2002. By 2013 they were losing $10 million every month. Why? DCHS said three-quarters of its patients were covered by government health programs, which pay less than private insurers. The recession made it worse as more people lost their jobs and health benefits, and then the government cut back further, slashing Medi-Cal rates that reimbursed providers for low-income patient care.

DCHS also cited the “volume and mix of services” and the “employee salary/benefits structure” as causes of the financial bleeding.

The nonprofit chain put itself up for sale in 2014, hoping to find a buyer that would preserve the pensions of current and retired employees, repay debts, honor existing union contracts, and maintain services.

And they did. Prime Healthcare Services, based in Ontario, California, made an offer of $843 million to buy DCHS. But under state law, nonprofit hospitals can’t change hands without the approval of the California Attorney General.

And that gave Prime Healthcare’s longtime enemy, the Service Employees International Union and its affiliate, United Healthcare Workers West, the power to blow up the deal. In July, 2014, UHW president Dave Regan met with Prime CEO Dr. Prem Reddy and told him, according to court documents, “that he would prevent the sale unless Prime allowed UHW to unionize hospital workers at all of Prime’s hospitals.” Prime refused Regan’s demand.

The union allegedly told Attorney General Kamala Harris that if she blocked Prime’s acquisition of DCHS, they’d spend $25 million to get her elected to the U.S. Senate in 2016, and threatened that if she didn’t, they would spend the money to elect somebody else.

Harris gave conditional approval to the deal but added poison-pill requirements, including an order to run the hospitals without any changes for 10 years, which would have continued the financial meltdown. Prime walked away.

The Daughters of Charity filed a lawsuit against the SEIU-UHW in Santa Clara County Superior Court, accusing the unions of extortion and of chilling bids from other suitors by threatening to block the attorney general’s approval.

Then Prime Healthcare Services filed a lawsuit in federal court accusing Kamala Harris of corruptly abusing her power in an illegal scheme to gain financial support of her political career.

The story is told in disturbing detail in the combined 85 pages of the complaints.

Now a New York-based hedge fund, which has never run a hospital, has offered to take over the management of DCHS. BlueMountain Capital Management would pump $250 million into the nonprofit chain, take 4 percent of annual revenue as a management fee, and have an option to buy the hospitals after three years.

Harris has granted conditional approval, and BlueMountain is presently reviewing the conditions, which include providing services and charity care for ten years.

If the deal falls through again, DCHS could enter bankruptcy. Pensions could be lost and the hospitals could close, costing 7,600 jobs and depriving the communities of local health care services.

Twelve million people are now enrolled in Medi-Cal — one in three state residents — and the number could go higher. How many hospitals will go bankrupt providing legally required services for below-cost reimbursements?

Imagine what would happen if all of American health care was run that way.

It’s easy for politicians to decree that services shall be provided and fees shall be reduced. It’s even easier for them to help their friends get lucrative contracts, and to collect campaign cash as a tip for good service.

What’s not easy is persuading anyone to go to medical school or build hospitals when politicians control health care. Too bad no one has ever been cured by a hedge fund seeking a tax loss.

Filed Under: Top Stories Tagged With: DCHS, Health care, Kamala Harris, Medi-Cal, Prime Healthcare Services, SEIU, Susan Shelley

Planned Parenthood’s California Counsel

September 13, 2015 By Steven Greenhut 6 Comments

The recent undercover videos of top Planned Parenthood executives discussing how to position and kill unborn babies in order to preserve the marketability of their body parts offer the sort of shocking revelations that typically spur California government officials to action. One might have expected state authorities to examine the substance of the issues raised by the Center for Medical Progress, the group of citizen-journalists who made the videos. Instead, California officials have rallied to Planned Parenthood’s defense.

Democratic legislators blocked a Republican proposal to audit Planned Parenthood’s California operations, which receive more than $200 million a year in reimbursements from Medi-Cal, California’s Medicaid program. Thirteen legislators had wanted the Joint Legislative Audit Committee to look into whether Planned Parenthood used any of that money to harvest and sell body parts, which is a felony. Senator Connie Leyva, a Chino Democrat, said an audit would be too expensive. And besides, Planned Parenthood provides “vital health care” services. They wouldn’t want to throw the baby out with the bathwater, after all.

Inaction from a legislature dominated by Democrats is no surprise. Far more troubling has been the response of Attorney General Kamala Harris. Last month, Harris, who is currently the leading Democratic candidate to replace Barbara Boxer in the U.S. Senate next year, received a letter from several Democratic members of Congress demanding that she—along with U.S. Justice Department officials — investigate the undercover videographers, who posed as buyers for a biotech company that performs medical research. “Press accounts regarding this incident have reported that this group created ‘fake identification’ in order to falsely impersonate corporate executives and ‘gain access’ to meetings with Planned Parenthood officials,” the letter states. It points to reports suggesting the group “filed paperwork to create a fake corporate entity.” The lawmakers also allege the undercover videos “may implicate California’s Invasion of Privacy Act, which prohibits recording individuals without their consent.” A Los Angeles Superior Court judge on August 21 ruled against that claim, but Harris appears undaunted. She immediately agreed to investigate the investigators, and brushed aside a letter from Republican state legislators asking her to look at whether Planned Parenthood violated any laws. As with the legislature’s Democrats, such questions hold no interest for the attorney general.

Harris’s tenure as attorney general already is an instructive lesson in what happens when a partisan takes over an important constitutional office and seems to put the demands of her political supporters above any pretense of even-handed justice. California attorneys general give the titles and summary of proposed statewide initiatives, and such short explanations are typically all that voters ever read about the measures before casting their votes. Harris has been so biased in crafting these titles and summaries that she was criticized harshly by some of the state’s most liberal newspapers, such as the Sacramento Bee. In particular, she gave a summary to a pension-reform measure that sounded as if its union opponents crafted it.

Harris currently is mired in a dispute with the conservative Americans for Prosperity Foundation. She has demanded the nonprofit educational group’s donor lists in exchange for allowing it to operate in California. AFP officials are understandably concerned about letting Harris and her political allies get their hands on such sensitive information. As KQED reported, “After two gay couples sued to overturn Proposition 8, the ban on same-sex marriage in California, the attorney general (like her predecessor Jerry Brown) refused to defend it in court. That, along with Harris’ argument that Prop. 8’s proponents didn’t have legal standing to defend it either, infuriated conservative groups.” Typically, state officials are charged with defending initiatives passed by the voters, but Harris again behaved as a partisan. Regardless of where one stood on the question of Prop. 8’s constitutionality or its political wisdom, Harris’s effort to undermine any defense of the measure set a troubling precedent.

Harris’s probe into the Center for Medical Progress could spell trouble for investigative journalism in general, not just these investigative journalists. Undercover efforts to expose wrongdoing are a long-running TV news tradition. Do we really want to prosecute undercover reporters for not getting their targets’ permission to record questionable conduct and misdeeds?

A fair-minded attorney general would look at all the entangling legal questions involving Planned Parenthood and the people who exposed its officials’ questionable behavior. Instead, we have the Golden State’s top law-enforcement official behaving as if she were Planned Parenthood’s California counsel. Harris’s brand of partisan “justice” may be less disgusting than Planned Parenthood officials talking about a fully formed fetus’s “crunchy” parts, but it’s disgusting just the same.

Steven Greenhut is the California columnist for the San Diego Union-Tribune. Write to him at steven.greenhut@sduniontribune.com.

Originally published by City Journal online

Filed Under: Top Stories Tagged With: Americans for Prosperity Foundation, Kamala Harris, Medi-Cal, Planned Parenthood, Prop. 8

CA GOP Can Wield Power During Special Legislative Sessions

July 6, 2015 By Joel Fox 1 Comment

Photo courtesy of DonkeyHotey, flickr

Jerry Brown made the Republican legislators relevant again. Brown’s call for special sessions for transportation and Medi-Cal funding invariably brings talk about possible tax increases. With a two-thirds vote needed to raise taxes, and the Democratic majority shy of the super two-thirds mark, Republicans must be part of the conversation.

Despite their best efforts offering innovative approaches to some of California’s difficult problems during the legislative session, the Democrats on major bills and the budget that needed simple majority approval mostly have sidelined Republicans. But that will not be the case when revenue solutions are sought and debated during the special sessions.

According to the governor, the special sessions are about permanent revenue sources to bolster transportation infrastructure and Medi-Cal. While Republicans put forward plans to use current revenues to satisfy funding concerns for the roads, much of the talk will focus on tax and fee increases. Republicans have said no to the need for new taxes since the state is awash in new money. Even post budget signing, the Legislative Analyst’s Office reported the state brought in a half-a-billion dollars more that the budget anticipated.

(As an aside, Republicans may have already supported a tax in their road funding proposal depending on how a court rules. One Republican suggestion is to use cap-and-trade funds recently put on gasoline production to fund transportation. The California Chamber of Commerce has gone to court claiming cap-and-trade amounts to a tax. If the Chamber suit is successful part of the Republican transportation package is a tax.)

Republicans position on taxes will also be tested in any Medi-Cal fix. One of the leading proposals to fund Medi-Cal is to increase the tobacco tax. If the governor is searching for a permanent revenue source to fund Medi-Cal, tobacco tax seems a poor choice. The tobacco tax is a diminishing resource as fewer people choose to smoke. Increasing the tax on smoking is supposed to discourage the practice thus limiting future revenues. Relying on the tobacco tax to rescue the Medi-Cal program would seem short sighted given the governor’s stated goal.

Given the need for Republican votes for tax plans, Republicans are in the middle of the debate and can offer savings ideas and plans re-directing current revenues that cannot easily be dismissed by the majority. If the GOP simply gave in to raising taxes then the issue of Democrats needing a supermajority is moot. Republicans will use their leverage to be deeply engaged in any solutions.

Originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: budget, GOP, Jerry Brown, Medi-Cal

CARTOON: Medi-Cal Mess

June 19, 2015 By CPR Editors Leave a Comment

Filed Under: Cartoons Tagged With: Health care, Medi-Cal

Special Tax Sessions Announced by Gov. Brown

June 17, 2015 By Joel Fox 1 Comment

In announcing the budget deal with the Legislature, Governor Jerry Brown announced two special sessions to deal with transportation and Medi-Cal funding. Call them the Special Tax Sessions.

In the press release announcing the sessions, the governor stated that the sessions were to “find more adequate funding for our roads and health care programs.”

The governor asked for “permanent and sustainable funding to maintain and repair the state’s transportation and critical infrastructure.” He also wants “permanent and sustainable funding to provide at least $1.1 billion annually to stabilize the state’s General Fund costs for Medi-Cal,” some of which would be used to meet the demands of programs Democratic legislators sought funds for in the current budget such as In-Home Supportive Services.

At the governor’s press conference announcing the budget deal, reporters asked Brown about his first term (third term?) campaign pledge to only seek tax increases with approval of voters. Brown brushed aside the old pledge indicating the pledge only applied to his first term.

Add it all up and there will be a push for tax or fee increases to support the governor’s call for “permanent and sustainable funding.” Discussions will revolve around gas taxes and a higher car tax or maybe a mileage fee for transportation; perhaps an increased cigarette tax and other healthcare taxes for Medi-Cal.

Brown might hope for support from the business community for the transportation and infrastructure fix. Those issues have been of on-going concern to business.

Still, the large influx of dollars in the current budget and the talk of tax proposals that may end up on next year’s ballot will only increase the anxiety of businesses and taxpayers alike and could result in stalemated special sessions.

Originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Jerry Brown, Legislature, Medi-Cal, Tax, taxes, Transportation

Nearly One-Third of Californians Dependent on Medi-Cal

June 14, 2015 By James Poulos 7 Comments

With Medicaid eligibility expanded nationwide under the Affordable Care Act, Medi-Cal enrollees have discovered that care in California is not keeping up with increased demand.

“Today, more than 12 million Californians, nearly one-third of the state’s total population, are enrolled in the government’s health insurance plan for low-income, disabled and disadvantaged residents,” U-T San Diego reported.

Wrangling reimbursements

The sharply increased burden has driven stark divides into statewide politics. The dispute has centered around reimbursement rates, which have fallen low enough to discourage many doctors from accepting Medi-Cal.

Even for those who do, low caps on Medi-Cal patients have become the norm. “According to the California Medical Association, Medi-Cal pays an average of $41.48 for an office visit, less than half the $102.45 that Medicare pays for the same service,” according to U-T San Diego.

Part of the problem traced back to 2011, when the state Legislature, deep in the red, passed Assembly Bill 97 — a bill cutting Medi-Cal reimbursements by 10 percent. As the San Jose Mercury News reported, a court injunction forestalled the cut until this fiscal year, but did not prevent it from staying in effect each year after that. In opposing the cut, Medi-Cal providers have beenjoined by the California Hospital Association and representatives in California’s rural counties, where doctors accepting Medi-Cal can be especially difficult to find without traveling long distances.

Gov. Brown’s administration has anticipated that the reimbursement cut will yield a first-year savings of over $214 million. But as state coffers have swelled with a big taxation windfall, Sacramento Democrats have pushed Brown to take a more liberal approach to budgeting.

For now, with the state deadline for budgeting looming, the governor’s office has refused to budge. Finance Department spokesman H.D. Palmer told the Mercury News that more specifics are needed on how reimbursement increases will expand access to care before the old rates are restored. Meanwhile, finance officials “have pointed out that the $91.3 billion Medi-Cal budget for 2015-16 is almost $10 billion more than the current fiscal year. More than half of the cost comes from the federal government, but the state increased its contribution from the general fund by $700 million for the next fiscal year, up to $18.2 billion.”

Competing priorities

Adding to the sense of chaos, activists have begun a new push to increase health care access for unlawful immigrants. That effort has come at an awkward time. As the Los Angeles Times observed, “reductions made in county health program funding to help finance Obamacare have made it more difficult for some local officials to add — and in some cases maintain — medical care for the poor and residents living here illegally.” California pulled about $900 million in funding for local health programs “to help pay for expanded insurance coverage for those eligible to receive Medi-Cal,” according to the Times.

Lawmakers have also targeted another way Gov. Brown has clawed back some health care outlays. In a unanimous vote, the state Senate sent legislation to the Assembly that would crack down on California’s so-called Medi-Cal recovery program. That regulatory approach that allows the state to reclaim Medi-Cal money from the estates of deceased beneficiaries, even going after the value of their homes. Under the law governing Medicaid, the federal government has been authorized to recover funds in a more narrow way.

For many Californians affected by the rules, the takings come as an shock. As Emily Bazar noted at the Sacramento Bee, beneficiaries can be targeted even if they never went to a doctor. In a particularly counter-intuitive twist, Obamacare enrollees placed into Medi-Cal based on their low income will be required to pay back their health subsidies — while higher-income Covered California enrollees will not have to repay the ones they receive.

Originally published by CalWatchdog.com

Filed Under: Top Stories Tagged With: Health care, Jerry Brown, Legislature, Medi-Cal

The Medi-Cal Mess

May 26, 2015 By Joel Fox 1 Comment

California’s health program for the poor and disabled, Medi-Cal, has presented state lawmakers with quite a perplexing paradox. More and more people fall under the protection of Medi-Cal and need a doctor but fewer and fewer doctors are accepting the low fees associated with the program. While a simple solution may appear to be increasing the size of the Medi-Cal budget, Medi-Cal is already stretching the state budget and squeezing other programs. Thus, dealing with the Medi-Cal mess has become a real problem for state lawmakers and the governor.

As former Gov. Schwarzenegger economic advisor David Crane pointed out in a Sacramento Bee op-ed, “Medi-Cal’s share of spending has grown 35 percent since Brown took office and now consumes one-sixth of the budget.”

Yet, while the Medi-Cal costs surged upward with new patients coming into the system, especially because of the Affordable Care Act, fees were cut for health care providers during the recent recession and have not been restored. Many providers have decided not to accept Medi-Cal patients because of the low reimbursement rate.

So, more patients seek doctors and other health care providers while fewer health care providers are available to see them. And raising the cost of the program jeopardizes the cautious fiscal management of the Brown Administration that is concerned about what happens when there is another economic downturn.

Recently, Brown’s Director of Finance, Michael Cohen, told the press that the administration was willing to discuss boosting Medi-Cal reimbursement rates if that would guarantee greater access to doctors. How that guarantee is made to work is not certain.

There is no question that the health care providers should be more fairly compensated for their services and that all patients should be able to see a doctor. Given the increase in state revenues it is anticipated that some relief to the Medi-Cal program is in the offing. Yet, Brown is right to be concerned about an expanding budget.

While there seems no simple solution, not just the health care providers and the budget dollars should be considered. Another focus should be on the users of the system, their participation in the program and the opportunity for them to rise up and get free of the need for Medi-Cal assistance.

That California has nearly a third of its residents in need of Medi-Cal to provide health care is a sad commentary on the opportunity for the people to improve their circumstances. Obstacles should be removed so that the private sector can increase well-paying jobs. Then many of the people and their families using Medi-Cal can move away from the state sponsored health care and get company or individual health insurance.

Reducing obstacles to good job creation would go a long way toward relieving the burden on the Medi-Cal program.

In addition, Medi-Cal’s value must be brought home to patients. Health care providers have told me that they sometimes have to double and triple book Medi-Cal patients because they don’t appear for their appointments. The reason often suggested is that many patients are not required to pay anything for the appointment and thus put little value on the service. A nominal co-pay by all patients would add value to the service and change the character of the program.

Californians should receive health care due them and health care providers should be justly compensated for their work. However, there appears to be no Alexander’s sword to cut through the Gordian knot that is Medi-Cal so the fix must be a more holistic approach.

Joel Fox is editor of Fox & Hounds and President of the Small Business Action Committee

Filed Under: Top Stories Tagged With: Doctor, Health care, Jerry Brown, Medi-Cal

Democratic Immigrant Protection Bills Don’t Solve Poverty Problem

April 8, 2015 By Joel Fox 2 Comments

Legislative Democrats heralded a package of bills they purport to aid and protect undocumented immigrants. Acknowledging the humanitarian concern behind the package, the plan will do little to help immigrants achieve the American Dream if something isn’t done to provide middle class jobs. Without them, many immigrants here and those attracted by California ‘s largesse are subject to a life of poverty.

Immigration reform is a Federal issue but California’s Democratic legislative leadership chooses to take the issue on to the extent that they can with this package of bills. There are many concerns associated with the bills worthy of serious questions and doubt, not the least of which is the immediate cost. Leading the cost concern is Senator Ricardo Lara’s SB 4 that would add 1.5 million undocumented immigrants to the already stressed Medi-Cal roles.

Putting the cost question aside for the moment, as well as the implication that the laws likely would serve as a magnet to draw even more undocumented immigrants to California, an important question is if these proposals become law will the immigrants the laws are designed to assist continue to be prisoners of California’s poverty prison?

California leads the nation in the number of people trapped in poverty. Many are immigrants in the country illegally. Without creation of good paying jobs many likely will remain victims of poverty.

The push for minimum wage increases is not the real answer to the poverty problem. Modifying regulations and cutting taxes to promote small business is one solution. Offering incentives to encourage the capital investment needed to create manufacturing jobs that pay middle class wages is another.

Taking the major step to encourage middle class jobs is the best thing the state can do for all California’s residents.

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee

Originally published by Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Democrats, Illegal Immigration, Immigration, Joel Fox, Legislature, Medi-Cal

Medi-Cal Struggles Leave Politicians Worried, Patients Hurting

February 23, 2015 By James Poulos 1 Comment

A victim of its own success, California’s popular Medi-Cal program has rapidly swelled to a large enough size to malfunction. It’s known as Medicaid in the rest of the country and provides medical care to poor people.

Mounting woes — from applicant backlogs to outdated regulations — have raised serious concerns among analysts and policymakers.

In part, the challenges facing the Medi-Cal system came about because of administrative changes triggered by the federal Affordable Care Act, or Obamacare. Here it’s called Covered California. As CalWatchdog.com reported, a combination of cuts in federal and state budgetary subsidies boosted provider costs.

“A provision of Obamacare hiked the rates for primary care doctors to the substantially higher Medicare rates for two years, but those increases ended on Dec. 31,” reported the San Jose Mercury News. “A second blow came last month when the state cut the Medi-Cal reimbursement rate by another 10 percent, a reduction approved by California lawmakers in 2011 but delayed in a court battle that doctors ultimately lost.”

But the ACA has made an even greater impact on California’s health care challenges by ballooning the population accessing Medi-Cal benefits. As the Mercury News reported, Obamacare opened the floodgates in Jan. 2014, resulting in 2.7 million more recipients to date.

California’s expanded recipient group now makes up 17 percent of total national Obamacare enrollment, even though California’s overall population is just 12 percent of the U.S. total.

State health officials, according to the Mercury News, have concluded that by the middle of 2016, “more than 12.2 million people — nearly a third of all Californians — will be on Medi-Cal.” Meanwhile, the program already consumes about two-thirds of California state-government spending on health and human services overall.

Budgetary fears

For both Gov. Jerry Brown and Sacramento legislators, these trend lines have raised sharp worries, as McKnight’s news servicereported:

“State lawmakers this week said the latest enrollment news is alarming, and that even if a new pending rate request hike goes through, there is concern the state will run out of funding to care for its Medicaid recipients. State Medicaid costs are up 4.3 percent this year while federal share of costs for new enrollees will begin dropping in 2016, according to Gov. Jerry Brown.”

Brown has made an effort to head some costs off at the pass in his budget plan. According to State of Reform, a health-care think tank, “Brown has earmarked $2 billion in total funds ($943.2 million General Fund dollars) to cover mandatory Medi-Cal expansion.”

But pressure to change the budgetary calculus in California’s favor has intensified.

Reducing access

The big picture for Medi-Cal has officeholders and policymakers so nervous because of the ripple effects of increased costs and recipient rolls. State of Reform observed:

“In addition to Medi-Cal primary cuts making it potentially impossible for new patients to find physicians, President Barack Obama’s executive action will make approximately 1 million undocumented immigrants in California eligible for health insurance tax subsidies.”

That has critics warning access to doctors could decrease sharply. In a sobering report issued by the Legislative Analyst’s Office, the impact of the president’s actions was incalculable:

“The benefits received by undocumented immigrants through these programs are almost entirely funded by the state and would therefore result in additional General Fund costs of an unknown amount. The General Fund costs to provide state–funded benefits to this population are unknown at this time.”

With the federal government putting the squeeze on California’s budget, state doctors have become increasingly scarce.

“There are mounting concerns there will not be enough plan doctors to accommodate the enrollment surge,” according to McKnight’s. “One recent study found that only 57 percent of the state’s primary care doctors accept new Medi-Cal patients.”

As a result, increasing numbers of recipients have been winding up in the ER. As the Fresno Bee observed, that transfer of burdens has undermined the claim advanced by Obamacare proponents “that patients with insurance would have primary care doctors to take care of them and less reason to use expensive and overcrowded hospital emergency rooms.”

Although experts have not determined the likely extent of doctors’ unwillingness to treat Medi-Cal patients, California lawmakers have begun to brace for the worst: a substantial budgetary increase that will not be covered by the federal government.

Instead, the higher health tab may have to be absorbed by increased taxes, cuts in other budget areas, or both.

Originally published at CalWatchdog.com

Filed Under: Top Stories Tagged With: ACA, Health care, Jerry Brown, Medi-Cal, Medicaid, Obamacare

Daughters of Charity Deal Carries Warnings for the Future of Health Care

Planned Parenthood’s California Counsel

CA GOP Can Wield Power During Special Legislative Sessions

CARTOON: Medi-Cal Mess

Special Tax Sessions Announced by Gov. Brown

Nearly One-Third of Californians Dependent on Medi-Cal

Wrangling reimbursements

Competing priorities

The Medi-Cal Mess

Democratic Immigrant Protection Bills Don’t Solve Poverty Problem

Medi-Cal Struggles Leave Politicians Worried, Patients Hurting

Budgetary fears

Reducing access

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