Legislators in Virginia have stopped short of ending a mandate that requires hospitals and nursing homes to release certain financial information.
But in reaching a compromise between healthcare providers and business groups, they may have set the stage for a possible conflict of interest.
At the end of June, the responsibility for collecting, compiling and disseminating the financial information of healthcare providers will shift from an independent state-run agency to a private not-for-profit organization that has representatives of hospitals, nursing homes, physician groups and health plans on its board, in addition to consumer and business groups.
"I hope that there won't be a problem, but it's always a possibility," said Paul Boynton, the executive director of the Eastern Virginia Health Systems Agency, a state-funded health planning agency. "We're definitely in a wait-and-see mode."
Since 1978, it has been the duty of the Virginia Health Services Cost Review Council to help contain healthcare costs by publishing rate reviews of hospital charges. In March, the Virginia General Assembly passed legislation that directs the Virginia Department of Health to contract with a not-for-profit organization to release the information.
The Department of Health has selected Virginia Health Information to compile and release the financial information. Established in 1993, VHI has been preparing reports based on individuals' hospital claim forms. Most recently, it produced a consumers' guide to obstetric services, which included each hospital's average delivery charges.
During the legislative debate, healthcare providers tried to get out of the reporting requirements altogether. When business groups balked, the Legislature formed the Joint Commission on Health Care to find middle ground. Their compromise was the shift in reporting powers. Healthcare providers signed on because the proposal at least gave them a say in the process of releasing the information, and business groups supported the shift rather than seeing all information channels cut off.
Virginia lawmakers did not go as far as those in North Carolina and Colorado, who effectively placed the dissemination responsibilities solely in the hands of the state hospital associations (Aug. 21, 1995, p. 22; May 8, 1995, p. 14). However, they gave VHI broad authority to determine what functions of the council should be retained. They also eliminated the legislative authority to publish the "Commercial Diversification Survey."
The diversification survey identified the parent companies and any other affiliated organizations of each hospital and explained the nature of the affiliations and the tax status of the organizations. It was the only comprehensive source of information providing net patient revenues, all other revenues, net profits and losses, total assets and net equity of the healthcare systems in the state.
The loss of this mandate and the transfer of authority have raised concerns that information on hospital charges and revenues will increasingly become less accessible. "In the information age, this seems to me like we're going backward," said Boynton, of the state health planning agency. While Boynton appreciates the obstetric-care and other similar VHI guides, he emphasized that they should be "in addition to, not in lieu of" the publications previously prepared by the council.
Not surprisingly, hospitals are happy with the new arrangement.
"The cost review council had always been in a position of disdain from hospitals," said Kim S. Barnes, the chief executive officer of the Commonwealth Coalitions on Health, based in Richmond, which represents the state's businesses. "The council members were appointed by the governor and were out of the hands of the interested parties. Hospitals weren't particularly thrilled with having a rate review organization hold their patient data information."
Now, the hospitals can share the public spotlight with managed-care plans and be a part of the process.
"This legislative approach is saying that we want something that is responsive to all people involved in the process," said Laurens Sartoris, the president of the Virginia Hospital and Healthcare Association. Sartoris said the council's reports were not reflecting the move toward outpatient care or managed care. The closure was "a question of relevance in today's market," he said. "They were only looking at hospitals and nursing homes."
Although he acknowledged that "nobody enjoys doing data submissions," Sartoris pointed out that a study conducted by the General Assembly's Joint Commission on Health Care found that the diversification survey did not have a broad readership. "It was a single slice of the healthcare pie," he said. "It was not used by consumers to make purchasing decisions."
Barnes said business groups also support the new order, given their strong representation on the VHI board. "Businesses want the data collected and out in a usable fashion, and hospitals don't want it to be adversarial," she said. "Everybody is satisfied with VHI, and the board is still functional despite the differences."
Regarding the loss of the diversification survey, she said that information about individual hospital charges will remain available and that businesses can use this data in negotiations with providers. "Our [business] group would vehemently oppose phasing out the information," she said.
Michael T. Lundberg, executive director of VHI, said seven of the 17 board members are representatives of consumer and business groups and that the other spots are divided among hospitals, insurers, nursing homes, physicians and the state government.
"We have enough representation from other groups to keep any particular stakeholder from cooking the results," he said. "Is the fox guarding the hen house? Not if any one group doesn't have a majority."
He said that if the public calls for the information formerly found in the diversification survey to be published, "then we're going to do it."