Lobbyists Line Up To Oppose Bill To Provide More Oversight Of Hospital Mergers, Acquisitions

The Roundhouse in Santa Fe. Post file photo

By Daniel J. Chacón
The Santa Fe New Mexican

Acquisitions and mergers of hospitals in New Mexico by private equity companies would undergo increased oversight under legislation generating stiff opposition from some of the most powerful lobbyists in the Roundhouse.

In its first hearing Monday before the Senate Health and Public Affairs Committee, several lobbyists representing various interests, from the Greater Albuquerque Chamber of Commerce to Presbyterian Health Services, stood up to voice their opposition to Senate Bill 14.

The committee postponed a vote on the bill until Wednesday, partly because it ran out of time but also because the bill has been amended.

SB 14 creates a process for the state Office of Superintendent of Insurance to review acquisitions and mergers “that materially change the control of a New Mexico healthcare entity and could negatively impact the availability, accessibility, affordability, and quality of care for New Mexicans,” according to a fiscal impact report on the original bill.

The proposed legislation comes after lawmakers last year passed a similar measure: Senate Bill 15.

Sen. Katy Duhigg, an Albuquerque Democrat who is sponsoring SB 14 alongside House Majority Leader Reena Szczepanski, called last year’s bill a “Band-Aid” to temporarily address hospital transactions “while we did stakeholder engagement” statewide.

“It was very bare bones, had zero transparency, zero enforcement,” she said of SB 15, adding it expires at the end of June.

J.D. Bullington, a lobbyist for the Greater Albuquerque Chamber of Commerce, said the chamber opposes the new bill out of concerns it will have the opposite effect from what is intended.

“Our hospitals, especially rural hospitals, are often cash starved because of the high percentage of patients that aren’t covered by insurance and also because they’re located in low population centers,” he said. “Sometimes, the only solution for a local hospital staying out of red ink is acquisition by an entity that can bring financial resources to the table.”

Duhigg told committee members mergers and acquisitions have led to higher health care costs and have negatively affected quality of care.

“Things that go hand in hand when [consolidations occur] are price increases,” she said, adding a recent study also found an over 25% increase in so-called hospital-acquired adverse events, which include falls and infections, when such consolidations occur.

“This is a trend around the country,” Duhigg said, adding New Mexico leads the nation.

A fiscal impact report states 17 of 45 private hospitals in the state, or 38%, are owned by private equity firms.

“Here in New Mexico, we have the highest percentage in the nation of hospitals owned by private equity companies, and we see the effects of it,” Duhigg said. “In New Mexico, hospital spending per capita stands out amongst our surrounding states.”

Over the last year, she said, she and others have met with hospital officials, health care providers, patients, patient advocates and others to solicit their input.

“Since we’ve had a lot of these transactions happen, we really got to see, up close in the communities that have been impacted by them, what the effect has been,” she said, adding the experience resulted in proposed whistleblower protections for medical providers and other provisions the listening sessions helped shape.

In an interview after the hearing, Duhigg said the substitute bill is “much more narrow.”

“It will only apply to transactions involving hospitals and then non-hospital entities only to the extent an insurance company or an insurance-affiliated company is acquiring them,” she said.

A report by Kaiser Family Foundation shows New Mexico spends about $4,000 per person on hospital care compared to $2,700 in Utah, $2,800 in Nevada, $3,000 in Texas and $3,200 in Colorado and Arizona.

“What we see is that there are a lot of practices that are designed to maximize returns, things like reducing and eliminating essential health services,” Duhigg said at the hearing. “Often, it’s labor and delivery services, and this is done regardless of the impact on patient outcomes.”

Private equity companies don’t make decisions based on residents’ needs, she added.

“It’s based on what is most profitable to that company,” she said. “In fact, they have a fiduciary duty to do what is most profitable to their shareholders.”

Duhigg said the goal is not to stop or block transactions or the influx of capital into New Mexico.

“It’s to make sure that when these transactions take place, it’s not at the expense of New Mexicans’ health,” she said. “It’s not at the expense of essential services that are offered or quality or affordability.”

In the interview later, Duhigg said the bill accounts for a hospital in an emergency situation.

“If a hospital is going to shut down, we’re not going to put it through a bureaucratic oversight process,” she said. “We’re going to make sure that it gets whatever capital it needs to continue providing services to New Mexicans.”

Organizations that spoke in favor of the bill included ACLU-NM, the New Mexico Trial Lawyers Association and Bold Futures, which describes itself as a statewide organization by and for women and people color.

Julianna Koob, executive director of the trial lawyers association, said the bill “isn’t everything” the group wanted.

“We would have pushed for more, but I understand in this building that that is the nature of compromise,” she said.

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