It wasnt difficult to predict the meltdown that occurred last week in certain pockets of New York when a powerful, independent commission released its anxiously awaited recommendations for the revamping of the states outmoded and financially teetering hospital system.
What was less predictable was the relative calm and even praise that greeted the recommendations, even as some of the devilish details were fiercely criticized.
I was flabbergasted by the sweeping amount of restructuring involved, said Kenneth Raske, president of the Greater New York Hospital Association. I thought the report was done in an extraordinarily professional sense. I dont agree with some of the findings, but that doesnt belie the quality of the work that went into it.
If successful, New Yorks agonizing process for restructuring a politicized, capital-starved hospital system for the 21st century could be a road map for other states struggling with the inherent tensions created by a heavily regulated hospital industry competing in an increasingly free and technologically advanced marketplace.
Health planning has always been in the culture in New York, and they found a mechanism to make health planning more important in its healthcare system, said Paul Ginsburg, president of the Center for Studying Health System Change. I suspect other states in the Northeast or Midwest that had strong health planning and a political culture might look closely at the New York model to effect their own change. The key thing is whether there is the political environment and culture that is supportive of health planning, which is coming back in a modernized, updated form, Ginsburg said.
Already, in New Jersey, where Gov. Jon Corzine has ordered the formation of a commission to study the hospital marketplace, officials are closely watching the New York process. The recommendations of the New Jersey commission wont carry the weight of law as the New York recommendations will if approved in full, but the New York report undoubtedly will be an inspiration to us, said Uwe Reinhardt, professor of healthcare economics at Princeton University and the chairman of the still-forming New Jersey commission.
I will certainly recommend that we invite the (New York) executive director to spend some time with us, Reinhardt said. God, when you have this much experience right down the road, you would be nuts not to take advantage of it.
Staggering in its detail and scope, the recommendations encompass the wholesale closure of nine hospitals statewidefive of them in New York City, two of which are already in Chapter 11and the reconfiguration, affiliation and conversion of another 48 hospitals.
In total, the recommendations address some very fundamental changes at one-fourth of the 237 hospitals in the state, calling for the reduction of approximately 4,200 hospital beds statewide, representing 7% of the supply. Payers and providers will save more than $1.5 billion annually, according to the commission, including $721 million annually to providers in reinvestment opportunities at hospitals surviving the downsizing. The less encompassing but highly targeted nursing home recommendations will reduce the states supply by 3%, or 3,000 beds, while creating alternative home- and community-based settings, according to the commission.
The processsimilar in some ways to the mandate of the federal Defense Base Closure and Realignment Commission, known as BRAC, which targeted military bases for closurewas craftily designed to minimize the fallout in a situation fraught with political intrigue. State officials already have set aside $2.5 billion to finance the restructuring and facility closing costs, including a promise of
$1.5 billion over five years from a federal Medicaid waiver that is contingent on implementation of all the recommendations.
Under the enabling legislation, once the governor sends on the full report, which he already has, the state Legislature has the single option of rejecting the recommendations in their entirety by Dec. 31. Otherwise, the recommendations become law, and the state commissioner of health, using hospital licensure as the stick, will be authorized to implement them by June 30, 2008. Meanwhile, the Commission on Health Care Facilities in the 21st Century, colloquially known as the Berger Commission for its chairman, Stephen Berger (See related Quotable, p. 36), is legislated to self-destruct on Dec. 31.
No politician ever wants to be accused of closing a hospital, so from that political context, an independent commission is the only way, said James Unland, president of financial consultancy Health Capital Group in Chicago.