By Joseph Edelen

DOVER — Lawmakers are attempting to rein in rising health care costs and increase fiscal transparency with the proposed Diamond State Hospital Cost Review Board.

It would give the state oversight of hospitals’ annual budgets.

Democratic leaders and state health care stakeholders have noted that the Delaware model is inspired by similar policies in Massachusetts and Vermont, specifically the latter’s Green Mountain Care Board.

But opponents like the Delaware Healthcare Association, which represents the state’s five nonprofit hospitals, and Republicans in the General Assembly, have pushed back on the efforts of those states, noting that many hospitals in Massachusetts and Vermont are operating at a deficit or facing closure.

Speaker of the House Valerie Longhurst, D-Bear, who is leading House Substitute 2 for House Bill 350, has refuted these claims throughout the legislation’s consideration, noting that Vermont ranks fifth in the nation for overall health system performance while touting the lowest percentage of residents who choose not to seek health care because of cost.

“Vermont has been able to lower health care costs without compromising quality or access with a model very similar to the board we are proposing,” Rep. Longhurst said.

Board makeup

Structurally, the Diamond State Hospital Cost Review Board would consist of eight members; the Delaware Healthcare Association president as a nonvoting participant, and seven governor-appointed members with knowledge of health care policy, business, finance or accounting.

The appointed members must be confirmed by the Senate and will elect a chairperson, who will receive a salary of $40,000 per year. The remaining appointed members will receive salaries of $35,000 for their work.

When factoring in salaries with additional staff and ongoing contractual support, the Diamond State Cost Review Board will cost the state nearly $1 million a year over the next three years. If the legislation becomes law, the board would begin its reviewal process in 2026.

How it works

The reviewal process will be contingent on the state’s spending growth benchmark, which has fluctuated between 3 and 4% since its establishment in 2018. If hospitals’ growth continuously exceeds the threshold, the board can put hospitals through a performance improvement plan to develop solution strategies.

If a hospital with a performance improvement plan continues to fail to hit the benchmark, the board could require the entity to submit their proposed budget for an approval process.

“The hospitals are the ones who then develop their improvement plans in collaboration with the board. But there is that same kind of collaboration that can happen,” said Senate Majority Leader Bryan Townsend, D-Newark, who is leading the bill in his chamber.

“It’s not just simply a strict liability of, ‘You exceeded this benchmark, we’re going to fine you.’ The heart it of this should be the collaborative approach, whether that’s an improvement plan that can bear out, or whether it’s the mechanism.”

Opposition

While Democratic leaders have been committed to the bill’s passage for its ability to address rising health care costs and fluctuating outcomes, hospital stakeholders have remained against the initiative, partly for its “politician control.”

Hospital leaders testified in opposition to the bill during its consideration in the Senate Executive Committee on Tuesday, including Bayhealth president and CEO Terry Murphy, who told the Daily State News that the crux of the issue goes back to good governance.

He referenced the Vermont board’s composition, which is made up of two lawyers, two representatives from academia and a physician, and said Delaware’s body would likely look similar.

“Our Bayhealth 17-member board includes a nurse and six physicians,” Mr. Murphy said. “They know best, they are closest to the patient, they’re closest in our community and know what our health systems need as relates to quality, cost and service — and where we’re going with our plans,” Mr. Murphy said.

The health executive added that leaders are willing to work with legislators on a compromise to be transparent with hospital budgets but remain apprehensive of having an approval process set for their spending growth.

Republican lawmakers have also pushed back on House Bill 350, citing the strain it will put on hospitals, the performance of similar structures in Vermont and Massachusetts, and hypocrisy from the state, which has exceeded its own targeted spending growth benchmarks in recent years.

Vermont perspective

During the bill’s hearing in the Senate Executive Committee, Minority Whip Brian Pettyjohn, R-Georgetown, called former University of Vermont Health Network president and CEO John Brumsted to testify on his experience with the state’s Green Mountain Care Board.

The board was originally meant to help operate a single-payer system in the state, but that plan became too expensive, he said.

Since then, he said that the board has been solely focused on health care costs as opposed to other factors like access and quality, while essentially acting as an independent board, which has led to hospitals operating in a deficit.

“If there’s no margin in the hospital, there’s no capital reinvestment. So there really hasn’t been any investment in facilities, programs, rejuvenation or certainly innovation over the past several years,” Mr. Brumsted said. “All of this has created an environment where there’s a lack of trust between the provider community and the regulators, which is unique for Vermont.”

When asked how hospital stakeholders and the state can remedy this complicated issue in the First State, Mr. Brumsted pointed to collaboration, which could help the state avoid issues being seen in Vermont.

“It’s got to be a collaborative environment with all of the stakeholders coming together and a collaborative approach to value-based care that essentially does budget for populations. That is a proven approach. Do it with everybody in the room and without pejorative mechanisms to artificially restrict what the true costs of health care are,” he said.

Throughout the legislation’s path in the General Assembly, both Rep. Longhurst and Sen. Townsend have referenced their frustrations with how negotiations have transpired, though they remain committed to working with hospital leaders to “ensure that more profits generated from providing health care to Delawareans are being spent on keeping Delawareans healthy.”

Despite differing viewpoints on the bill, House Bill 350 remains in the Senate, where it awaits a vote on the floor. The measure’s companion bill, House Bill 395, which was introduced Wednesday, was released from the House Administration Committee and also awaits a floor vote.