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Hospitals' deregulation hits obstacle

by Nora Edinger

REGIONAL EDITOR

A roadblock is up on Stonewall Jackson and St. Joseph's hospitals' route to rate-setting freedom.

During the Thanksgiving holiday, the state Health Care Authority notified 19 hospitals Gov. Cecil Underwood had designated for deregulation that the move is against state code.

"We felt that they did not look at what the (state code required)," said Parker Haddix, authority director.

Haddix was referring to a list of five criteria with which Underwood classified hospitals as financially vulnerable earlier this fall. The authority told hospitals last week more criteria need to be checked to give a clear portrait of vulnerability -- such as financial loss amounts and history, percent of beds in use or any changes in the percentage of patients covered by governmental insurance.

Stonewall Jackson in Weston and St. Joseph's in Buckhannon were among those hospitals originally identified by Underwood as in need of freedom to raise their rates for privately insured patients in order to cover losses from other patients.

"I'm not surprised," said David Shaffer, Stonewall chief executive officer, of the decision. "I don't think they wanted to deregulate them in the first place."

West Virginia and Maryland are the only two states to regulate such rates.

"It is very disappointing," said John Law, spokesperson for the state Hospital Association, a private group that represents hospitals and is in favor of complete deregulation.

"They're certainly being very specific on what the levels of financial vulnerability are," he added.

Indeed, Haddix said only a handful of the state's 69 hospitals would likely qualify for rate-setting exemption under the authority-proposed standards.

He was unsure if St. Joseph's or Stonewall Jackson would be among them. He noted both hospitals made a profit in 1999. In figures released this month, Stonewall Jackson came in $2.4 million in the black, and St. Joseph's was $481,000 ahead.

Statewide, West Virginia hospitals lost $77 million in patient care in 1999, although they made an overall profit of $74 million when other revenue -- such as parking garages and cafeterias -- are factored in.

Shaffer raised the question of politics in the timing of the announcement.

"I think it has everything to do with Gov. Underwood losing the election," he said.

Law, who said Gov.-elect Bob Wise is known for his concern for health care issues, noted the future of deregulation efforts may still be active.

"This is an issue that's been around four years," said Law, referring to financial troubles that began with the 1997 passing of the federal Balanced Budget Act and limits on Medicare/Medicaid reimbursements.

"It won't go away anytime soon."

Rod Blackstone, a spokesperson for the governor's office, agreed.

"We don't think it necessarily kills any hope of getting some help for the financially strapped hospitals," Blackstone said of the authority's action. "The door is still open, at least, for the Health Care Authority to provide this relief."

Haddix was uncertain how the case-by-case review would occur but said interested hospitals would need to contact the authority for their pursuit of deregulation to continue.

The authority already exempted critical-access hospitals from rate setting two years ago, Haddix has said of another federal classification of hospitals.

There are eight such hospitals in the state, with Broaddus Hospital in Philippi and Grafton Hospital among them.

Regional editor Nora Edinger can be reached at 626-1403 or by e-mail at nedinger@exponent-telegram.com.

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