While having their arms twisted to compete in the open market, government-owned hospitals are wondering how they are supposed to conduct business when all their internal documents and deliberative processes are open to public scrutiny.
Public hospital administrators say they don't mind being held accountable to the citizenry. What they mind is having to hand out sensitive material that private competitors will use against them.
The various open records laws may require public hospitals to hang out in the "sunshine" their hiring processes, compensation, contracts and strategic plans, in addition to budgets and finances. Private hospitals, even not-for-profits, don't have to disclose such matters, aside from what appears on Medicare cost reports and Internal Revenue Service Form 990 tax filings.
The chancellor of the University of Kansas isn't taking this lightly. He asked the state Legislature to exempt the university hospital in Kansas City from having to make public its contracts and business arrangements with HMOs. Last week the Legislature passed the bill, and Gov. Bill Graves, a Republican, said he would sign it.
"Clearly you're not going to be able to compete in the marketplace if you're being placed at a competitive disadvantage by the fact that you're a public institution," Chancellor Robert Hemenway said. The university has long held that it is not required to release such information. Because that has not been tested in the courts, however, the university decided it would be safer to have it written into law.
The Associated Press has filed a request under the Open Records Act to see the contracts and marketing plans. It also asked Attorney General Carla Stovall for a legal opinion. But the bill was rushed through the Legislature before she could study the issue. No hearings were held on the change.
"If the AP could go to Columbia/HCA (Healthcare Corp.) and obtain a copy of contracts they sign, they would do that," Hemenway said. "But we have a rule of law in this country that private contracts are private and are not subject to open records. All we ask is to be treated in our private business relationships as any other business."
Although KU is a state hospital, it is not supported by state tax dollars.
In Georgia, fear of letting Columbia read their strategic plans has led a handful of public hospitals to restructure into a private, not-for-profit format. Public hospital officials told MODERN HEALTHCARE*that Columbia has requested marketing and business plans, pricing strategy and employee information (April 8, p. 13).
Lindy Richardson, spokeswoman at Columbia's Nashville, Tenn., headquarters said: "I don't even know that that's true. Check with the Georgia hospitals. Every market has its own strategy. The development of the strategy is at the local level."
Sarasota Memorial Hospital in Florida has received calls "routinely" from Columbia's Doctors Hospital asking for service prices, a spokesman said.
In another market that Columbia has recently entered, San Jose, Calif., "it hasn't happened, but it wouldn't surprise me if it did," said Robert Sillen, executive director of Santa Clara Valley Medical Center.
"We have never produced a strategic plan," Sillen continued. "It just feeds information to our competitors." Maintaining open records under the sunshine act is "not a problem from a public policy point of view" but is nevertheless "a burden we have to operate under," he said.
There are two interesting exceptions to California's sunshine law. District hospitals, which receive some tax support, got their "hospital trade secrets" (rather broadly defined) exempted from it. And the state's Medi-Cal contract with each county, for Medicaid patients, is not subject to public disclosure, to give the state's Medi-Cal czar more negotiating power.
Still, not all public hospital executives find the open records law onerous. At Tampa General Hospital, president Fred Karl said it's disadvantageous but "not an insurmountable obstacle. I get along with it just fine."
Tampa General had to stop and restart its search for a new chief executive officer after the St. Petersburg Times sued to open up what had been intended as a closed process.
"Tampa General is a public trust," said Marty Rosen, the Times reporter on the story. "In the past, anything done in secret in this hospital, time generally shows it's not in the public's best interest. Often those secret meetings have proved to involve moves to make the hospital private or sell it." In 1994 the hospital's president, David Bussone, resigned after losing confidence of the board. Some board members believe he had been secretly discussing selling it to Columbia.
The newspaper and hospital lawyers went back and forth a few times, and finally the Times printed a list of applicants and finalists. One of those finalists was Dan Couch, deputy executive director of Truman Medical Center in Kansas City, Mo. Truman is a county hospital, and Couch is comfortable working under the sunshine law. But he'd been told that the Tampa search would be held under wraps and did not tell his hospital he was talking to Tampa General.
"I didn't have an opportunity to reach our board chairman before Marty reached her," Couch said. "That's a heck of a way for your board chairman to find out."
That kind of thing can discourage qualified people from applying for top jobs, said KU's Hemenway, who once participated in a search at a Florida public university. Sitting university presidents tend to avoid searches in Florida because of the stringent sunshine law, he said.
Jay Wolfson, a Tampa General board member, said that when the first search was done, there were 250 applicants. "When they learned their names could be subject to sunshine, dozens dropped out. People called us and pleaded, `Please don't make my application public because my boss doesn't know I'm looking for a job."' In the second search, the number of applicants was much smaller.
The Times' Rosen said allowing a secret search to go forward at a hospital with a troubled record of operating under the sunshine law sends the wrong message to a new CEO.
Fred Karl agrees.
"This is a public hospital and subject to the Florida open meetings act. Anyone who is timid about that would likely have trouble operating under it," he said. Further, when the search was reopened, board members found there were a lot of qualified applicants who had not made the search firm's short list the first time.
Down the coast in Sarasota, the sunshine law is being put to yet another purpose. Two weeks ago, three unions asked Sarasota Memorial for all the employees' names, addresses, home phones, Social Security numbers, job descriptions and salaries. The hospital, a state institution, had to give it to them.
Wolfson concludes: "To operate effectively as a business, you have to play by the same rules as everybody else. There are times when operating in the sunshine makes that difficult."