Ballot Initiative to Ensure Taxpayer Health Care Dollars are Dedicated Exclusively to Patient Care and Needed Services is Certified

Measure will require hospitals to be transparent about their financial holdings, to limit exorbitant CEO salaries and excessive profits to protect services for communities in need of those services

CANTON, Mass. — Last week, the Attorney General’s office certified a ballot e initiative that will require hospitals to be transparent about their financial holdings and other activities, to limit CEO salaries and to limit and claw back excess profits to ensure that taxpayer dollars are dedicated exclusively to safe patient care and necessary services for all communities in the Commonwealth.

This measure, filed by the Massachusetts Nurses Association/National Nurses United, has been proposed to respond to dramatic changes within the hospital industry driven by state and national health care reform, including the merger, consolidation and conversion of non-profit hospitals into larger multi-million dollar corporate networks. In 2010, Attorney General Martha Coakley released a report raising concerns about this trend and pinpointing the main driver of the Commonwealth’s increasing health costs – market clout of highest paid providers – at the expense of smaller community hospitals.

“Every hospital, whether it's non profit or for profit, gets a substantial amount of money from public funds - i.e., the taxpayers via Medicare and Medicaid - to provide health care for the residents of the Commonwealth, yet there is no way for the public and policy makers to accurately understand how those taxpayer dollars are being allocated,” said Julie Pinkham, RN, executive director of MNA/NNU. “This initiative is needed to ensure that the public and the communities served by these hospitals have a clear picture of the financial health of the hospitals that serve their needs. Furthermore, it will serve to ensure that patients are getting the care they need with the resources that are available to these hospital administrators.”

The Attorney General’s certification is a critical step in the process. This approval indicates that the initiative has passed constitutional standards and thresholds and can now be brought to the voters in November of 2014.

“Too many hospitals and health care organizations have been cutting services and staff, while posting enormous profits and/or hiding those profits,” Pinkham added. “At the same time, some hospitals are hoarding these profits, while siphoning off services from smaller community hospitals and are paying their CEOs enormous seven-figure salaries, while those same CEOs are cutting services and depriving their patients’ access to needed care.”

As an organization, the MNA/NNU, in concert with numerous consumer and health care advocacy groups, has been involved in a number of campaigns over the years to protect services for local communities that are the direct result of this ominous trend. For example:

• In 2013, Partners Health Care, which posts profits in excess of $400 million, attempted to close its highly successful and desperately needed medical detox program at Brigham & Women’s Faulkner Hospital, even though the DPH determined it was an essential services.
• In 2012 – 2013, UMass Memorial Health Care implemented six layoffs, closed hospital floors and forced a strike vote by their nurses over unsafe patient care conditions, doing so while having posted more than $70 million in profits.
• In 2013, a coalition of community members from Franklin County was formed to serve as a watchdog group over Baystate Health Systems, which has systematically siphoned off services from Baystate Franklin Medical Center to its Springfield-based hospital, all the while posting multimillion dollar profits, and paying its CEO more than $3 million per year.
• In 2013, Steward Health Care, owned by a multi-billion dollar Wall Street private equity firm, pursued the closing of a Level II pediatric unit at Morton Hospital in Taunton, even though the DPH ruled that this was an essential service that would cause hardship for children and families in that community.
• Cambridge Health Alliance and Boston Medical Center, two hospitals that serve a disproportionate share of Medicaid patients, are struggling to survive under the current reimbursement structure, while rapidly growing networks of hospitals, such as Partners Health Care and Beth Israel Deaconess generate significant profits from serving a larger population of privately insured patients.

In each of these instances, health care executives cited the onset of ObamaCare and state health care reform as the driving force behind their decisions, at a time when WBUR recently reported that hospital profits (margins) nearly doubled between 2010 and 2012.

The proposed ballot initiative has four key provisions to address this situation:

1. If in any fiscal year a facility that accepts funds from the Commonwealth, and whose patient mix is less than 60% government payer, reports to the Center for Health Information and Analysis an annual operating margin, including amortization and depreciation that exceeds 8%, that facility shall be subject to a civil penalty equal to the amount by which the annual operating margin exceeds 8%.

2. If a hospital that receives taxpayer money should compensate its CEO annually more than 100 times the annual compensation of the lowest paid full-time employee of that hospital, the hospital will be fined an amount equal to the amount that the CEO's compensation is over 100 times the compensation of the lowest paid full-time employee, and that fine will also be deposited into the Medicaid Reimbursement Enhancement Fund.

3. Every hospital that receives taxpayer money will disclose to the Center for Health Information and Analysis all financial assets, including assets held in offshore accounts. This will allow policy makers and the public to better understand the true financial picture of the state’s health care providers and what they are doing with those resources.

4. Lastly, the initiative creates a new fund on the Commonwealth's books called the Medicaid Reimbursement Enhancement Fund, which will be funded by the penalties for excessive CEO salaries and profits described above. Money in this fund is intended to be used to improve Medicaid reimbursement to eligible hospitals.

“We have created a health care system of haves and have nots in Massachusetts, a system of winners and losers, where the mega health care corporations are the winners and too many patients and too many communities are the losers,” Pinkham said. “The public has a right to know how and where their health care dollars are being invested. Particularly at a time when hospitals are using the current financial climate as an excuse to degrade or limit the care they are providing to vulnerable patients. Our hospitals, no matter who owns them, are a public trust and our safety net, and this initiative is designed to give some long overdue control back to the tax payers and help protect that safety net.”

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Founded in 1903, the Massachusetts Nurses Association is the largest professional health care organization and the largest union of registered nurses in the Commonwealth of Massachusetts. Its 23,000 members advance the nursing profession by fostering high standards of nursing practice, promoting the economic and general welfare of nurses in the workplace, projecting a positive and realistic view of nursing, and by lobbying the Legislature and regulatory agencies on health care issues affecting nurses and the public. The MNA is also a founding member of National Nurses United, the largest national nurses union in the United States with more than 170,000 members from coast to coast.