By Joseph Edelen

DOVER — Health care leaders have been vocalizing their objection to a bill to establish state oversight of hospital spending but committed to working with lawmakers on a solution to rising costs.

Regardless of the opposition, House Substitute 1 for House Bill 350 moved through the House Administration Committee on Wednesday.

Under the proposal — led by Speaker of the House Valerie Longhurst, D-Bear, and modeled after a similar structure in Vermont — the Diamond State Hospital Cost Review Board would be created to examine and approve annual hospital budgets, beginning in 2026.

Since the measure’s introduction March 21, the state’s five health care systems have opposed it, with the Delaware Healthcare Association calling it a “risky plan that would harm patient care and fail to control health care costs in Delaware.”

During the bill’s consideration in committee Wednesday, Rep. Longhurst stated that, since the establishment of a health care cost benchmark in 2018, the guideline has only been met once — in 2020, amid the pandemic.

Further, she said, hospital costs totaled $3.5 billion in 2021, a 9.3% increase from 2019 spending.

“Despite setting the goal, we have no mechanism as a state to help meet those targets,” she said. “The main reason I bring this forward is because there are concerns in the rising health care. In the state of Delaware, 42% of our budget is our health care. We can’t continue that in the years to come. We’ve waited for these benchmarks to level out in the last five years, and they have not done that, so we are taking this measure because we have to get a hold of (this).”

With dozens of health workers filling the House chamber to testify about the act, Rep. Longhurst and House Majority Leader Melissa Minor-Brown, D-New Castle, assured them that the mechanism to control spending would not impact their job security.

And, though health care groups signaled opposition to the Vermont-based model before the bill’s consideration and during public comment, Rep. Longhurst noted that profit per patient is $1,075 in Delaware, which is nearly half the cost for the metric. Additionally, she noted that Vermont spends more on direct patient care labor.

“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 today,” she said.

During Wednesday’s public comment period, the measure received praise from several groups, like the Delaware State Education Association and Retirees Investing in Social Equity Delaware. Meantime, hospital representatives, while opposing it, did commit to teaming with lawmakers to determine a solution.

For one, Brian Frazee, president of the Delaware Healthcare Association, stated that the Vermont model is not the right fit for the state. However, he said he would continue to talk with stakeholders and legislators in the coming weeks about how best to address prices.

“We share the concerns around health care costs,” he noted. “We share the concerns around what we need to do to make sure we have a robust health care delivery system in our state, given our evolving demographics, our growing population, our aging population as the fifth oldest in the country.”

Bayhealth president and CEO Terry Murphy also gave input, stating that, instead of the state-governed review board, the current community board structure allows facilities to better serve their patients.

“What I would encourage is … working with the hospitals. I actually think that’s a great idea. I think the hospitals are willing. We have a great knowledge, but it’s also very complex ... what we do,” he said.

Following the extensive public comments, an effort to table the proposal by House Minority Leader Mike Ramone, R-Newark, was unsuccessful.

House leadership then moved to a roll call vote on HS 1 for HB 350, which passed along party lines. With the bill released from committee Rep. Longhurst said she would be having conversations on the next steps during the General Assembly’s two-week Easter break.