ChristianaCare has filed suit in the Delaware Court of Chancery to halt a law that would create a state board to oversee, and change, hospital budgets. Photo by Pixabay/Pexels
ChristianaCare has filed a lawsuit to stop the creation of a board that would oversee hospital budgets, saying it violates the system’s state and federal constitutional rights and corporate laws, and threatens its mission to care for the community.
The suit, filed in Delaware’s Court of Chancery, which deals with business issues, says House Bill 350 illegally gives the state control over private and nonprofit businesses.
The bill was signed into law June 13 after a battle through the legislature.
Brian Frazee, CEO of the Delaware Healthcare Association said hospital and legislative leaders negotiated several provisions of the original House Bill 350 to reduce the immediate harm to hospitals, health systems, patients and communities.
“However, DHA and its members remained firmly opposed to some components of the legislation that were not addressed during the legislative process,” Frazee said.
“DHA supports our members, including ChristianaCare, as they seek a better path forward, and looks forward to continuing working with policymakers and all stakeholders to ensure access to high-quality, affordable care for Delawareans today and for generations to come.”
House Speaker Valerie Longhurst, D-Bear, and Senate Majority Leader Bryan Townsend, D-Newark, said they were confident the law would withstand judicial and constitutional scrutiny.
“The delivery of high-quality and economically sustainable health care is of paramount concern to the state government and to our constituents, and House Bill 350 went through many iterations as we tried to craft a solution that would deliver for Delaware’s hard-working taxpayers, while accommodating practical and policy concerns raised by the hospital industry – including Christiana Care,” they said.
“We are disappointed that the state’s largest hospital system has chosen to continue in an oppositional posture, rather than working with the General Assembly and other stakeholders to fine tune the structure and operation of the Board – which they have not even allowed to get off the ground before working to undermine it.”
During the months-long battle in the State House, D emocrats backed by Gov. Jack Carney said hospital charges make up a huge part of state and resident healthcare costs and needed to be controlled.
The hospitals and Republicans said the state had no business butting into a private, complicated, multi-tiered business. nce more than a third of state revenue is currently derived from businesses incorporated here—money that would likely be replaced by higher taxes if those entities went elsewhere.
“Given its momentous reach and scope, the measure was rushed. It was first introduced on March 12 and was passed by the legislature in its final form—its third incarnation—on May 21,” their statement read. “The House Health Committee was never allowed to scrutinize the bill, with … Longhurst gaming the system by assigning it instead to the House Administration Committee, which is exclusively controlled by herself and the two other leaders of the House Democratic Caucus.”
They called the final compromise bill “an exercise in conceit.”
“Its supporters believe that government appointees are more capable of making hospitals’ spending decisions than the men and women who have spent their careers working in the healthcare sector,” it said.
The “poorly conceived law” is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus, the House statement said.
“A state government with one-party rule does not engage in consensus building nor reflect any perspective that is not in keeping with its monoculture of political thought,” it said. “The result is a growing list of plaintiffs like ChristianaCare who are forced to head to court to secure the fair consideration they should have received in the legislature and by the governor.”
ChristianaCare said the new law will create a politically appointed, unelected and unaccountable “super-board”— the Diamond State Hospital Cost Review Board — administered by the Delaware Healthcare Commission with authority to override the strategic and budgetary decisions made by the hospitals’ directors.
During the legislative debate, hospital officials said the state move would lead to fewer services and longer waits.
On Monday, across the top of the system’s patient portal, it ran this banner: “ATTENTION! We are experiencing high demand for imaging/radiology services. Results for some non-urgent tests may require 5-15 business days and will display in the portal as soon as they are available. We appreciate your patience.”
Those kind of waits could be more and more common if the state forces hospitals to slash budgets to meet the state benchmark governing hospital budgets. It will be set at either 2% growth over the previous year or the Core Consumer Price Index plus 1% over rates from the previous year, whichever is higher.
The board will be tasked with making sure hospital pricing doesn’t rise any more than the annual benchmarks set by the state through its Delaware Economic and Financial Advisory Council. It will be authorized to punish hospitals that don’t comply.
ChristianaCare suit
Christiana’s lawsuit also argues that HB 350 violates federal constitutional rights, by forcing private hospitals to disclose confidential information about its future priorities and strategy, and by unfairly targeting only a few private hospitals.
“House Bill 350 raises important questions about the integrity of the corporate franchise in Delaware, and whether it is legal for the government to usurp authority over core business decisions such as setting the budget from a corporation’s duly elected board,” said Nicholas Marsini, chair of ChristianaCare’s Health System Board.
“We are hopeful that the Court of Chancery will provide clear guidance on these important legal questions that impact not only ChristianaCare, but potentially any corporation that does business in Delaware.”
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“This lawsuit is necessary to preserve and ensure independence in clinical decision-making and patient care, critically necessary hospital services and resources, non-profit board autonomy, and a strong health care delivery system in this community for generations to come,” said Lolita Lopez, chair of ChristianaCare’s Health Services Board.
For more than 136 years, ChristianaCare has offered acute hospital care and medical services to patients throughout the community and region, making high-quality care more accessible, equitable, and affordable, with a commitment to improving the health of the population and the health outcomes for every person it serves, the press release said.
ChristianaCare shares the legislature’s concerns about the cost of healthcare and recognizes the complexity of this national issue, the press release said.
“We look forward to collaborating with various stakeholders in our health eco-system in order to improve health outcomes for Delawareans, and make high-quality care more accessible, equitable and affordable for all in our community,” the press release said.
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