Proposed Sale of French Hospital Medical Center, Arroyo Grande Community Hospital and Corona Regional Medical Center to Universal Health Services

Proposed Sale of French Hospital Medical Center, Arroyo Grande Community Hospital and Corona Regional Medical Center to Universal Health Services
San Luis Obispo
Public Hearing
September 15, 2003

My name is Michelle Jun, Staff Attorney at Consumers Union. Since 1936, Consumers Union's mission has been to test products, inform consumers and protect the public. I am here today under the third prong, as a member of the Community Health Assets Project, a national project dedicated to the preservation of charitable assets across the country. We have worked in 44 states seeking to improve conditions and outcomes for communities when their nonprofit hospital or health plan converts to for-profit status.

In a letter dated August 8, 2003, Vista Hospital Systems and French Hospital Medical Center provided a list of documents that have not been submitted in their filing to the Attorney General regarding the sale of its hospitals.(1) After reviewing the filing, we believe other documents have not been submitted despite the legal requirements for the review of this sale. The following submissions are either insufficient or missing entirely for Arroyo Grande and French:(2)

the two most recent community needs assessments;(3)
a breakdown of inpatient, outpatient, emergency room charity care spending and the annual number of such visits for the past 5 years;(4)
all services to Medi-Cal patients, county indigent patients and other class of patients and the type of services provided, the payor and the cost of services provided for the past 5 years;
all material effects that this proposed sale may have on the delivery of health care services to the surrounding communities and a statement on how this sale will affect the availability and accessibility of health care in these communities;(6) and
"[a] description of each measure proposed by the applicant to mitigate or eliminate any significant adverse effect on the availability or accessibility of health care services" to these communities.(7)

Finally, the only board meeting minutes submitted are from April 1, 2003 despite the requirement to include board minutes and other documents "reflecting the deliberative process" used by Vista and French in selecting Universal Health Systems.(8) It is imperative that these documents be made available so that the Attorney General can review the process Vista underwent in making the decision to sell its hospitals and to sell to a for-profit system. After all, Vista's assets are those of the San Luis Obispo community.

The closure of San Luis Obispo General Hospital and the proposed sale and conversion of the county's last nonprofit hospitals to for-profit facilities may bring San Luis Obispo devastating changes in health access and services to its community, particularly to its uninsured and underinsured residents.

UHS has promised to "use its best efforts to provide charity and indigent care at a level that is equivalent, in the aggregate, to the level of such charity and indigent care that was previously provided by Seller through the Hospital Businesses.(9) " Such broadly versed promises are not sufficient given the recent closure of the county's major indigent and charity care provider. This community deserves a firm response and a definite policy on indigent and charity care.

San Luis Obispo County is statutorily mandated to provide indigent care, or CMSP.(10) The San Luis Obispo County Hospital Authority has acknowledged the county's responsibility to provide indigent care.(11)

We understand that General Hospital was a major provider in indigent care and in its absence, French agreed to continue providing certain levels of indigent care. San Luis Obispo General served from two to five times the number of indigent patients compared to the other facilities in the county when you consider patient days, outpatient visits and hospital discharges.(12)
(*See Graph 1 of Appendix A*)

The delivery of services to Medi-Cal patients should also be reviewed. General Hospital treated the lion's share of Medi-Cal patients in the county. In fact, General provided at the least three times, and at the most, twelve times the number of Medi-Cal patient days and outpatient visits.(13) (*See Graph 2 of Appendix B*)

It is appropriate to find out what guarantees are being made to serve that population and who will carry out the county's responsibility to provide indigent care to its uninsured and underinsured residents. Historically, for-profit facilities have not had to pick up indigent care responsibilities, but the context will now be radically changed with the possibility of all acute care facilities being operated by for-profit systems. We ask, will Universal Health Systems be consolidating Arroyo Grande Community Hospital and French Hospital Medical Center? And will the French facility be subsequently closed?

As I have stated, the submitted filing does not even begin to provide answers to these important issues regarding health access and delivery to the county's uninsured and underinsured. We understand that the Camden Group has been hired to ascertain the health impact of this proposed acquisition. We strongly recommend that Camden thoroughly address these issues and investigate how the county and its health facilities will provide indigent care to this community.

The issue of charity care is important because if this sale is approved, there will be no remaining public or nonprofit hospitals left in the county. And certainly the data shows that the hospitals in the county generally left that responsibility up to General Hospital.(14) We recommend that the Attorney General address the county's pressing concern over the increasing lack of charity care which is likely to result if these hospitals are converted to for-profit facilities.
(*See Graph 3 of Appendix C*)

The Arroyo Grande and French facilities share the same written charity care policies, providing care to all whose income is at or below 200% of the federal poverty level. This charitable assistance policy is of great importance, particularly because nearly a quarter of the population of San Luis Obispo County would qualify.(15) In addition, approximately 42,500 residents in San Luis Obispo County are uninsured.(16) Without establishing conditions on this sale, many residents would be left with the difficult choice of either facing huge debt from medical costs, or being unable to access medical care at all.

Tenet, the owner of the two other hospitals in the county (Sierra Vista and Twin Cities Community Hospital), proposed their "Compact With Uninsured Patients" earlier this year to address the treatment and pricing for uninsured patients.(17) The following are among the promises made to indigent patients:

to refrain from pursuing legal action for the nonpayment of bills by unemployed patients or placing a lien on the uninsured patient's home if that is their only asset; and
to provide uninsured patients treatment and in addition to offer patients "discounted pricing for services at rates equivalent to the hospital's current managed care rates, which are substantially discounted rates, or 'gross' charges." (18)

We now ask Universal Health Systems, will it commit to similar promises to assist the county's uninsured and underinsured residents?

Thank you for the opportunity to speak and I now turn to my colleague, Leslie Bennett.

Appendix A
Comparison of CMSP Patient Days, Outpatient Visits and Discharges by Facility.
(Data obtained from Office of Statewide Health Planning and Development filings.)

Appendix B
Percentage of Medic-Cal to Total Patient Days and Outpatient Visits.
(Data obtained from Office of Statewide Health Planning and Development filings.)

Appendix C
Charity Care as a Percentage of Gross Patient Revenue by Facility.
(Data obtained from Office of Statewide Health Planning and Development filings.)

______

Notes:

(1)Letter from Richard F. Seiden, Foley & Lardner to Mark J. Urban, Office of the Attorney General dated August 8, 2003.

(2)Cal. Code Regs. tit. 11 § 999.5.

(3)Cal. Code Regs. tit. 11 § 999.5(d)(5)(A); Schedule J of the Asset Purchase Agreement.

(4)Cal. Code Regs. tit. 11 § 999.5(d)(5)(B); Schedule P of the Asset Purchase Agreement.

(5)Cal. Code Regs. tit. 11 § 999.5(d)(5)(C).

(6)Cal. Code Regs. tit. 11 § 999.5(d)(5)(G).

(7)(Cal. Code Regs. tit. 11 § 999.5(d)(5)(H).

(8)Cal. Code Regs. tit. 11 § 999.5(d)11)(A)&(D).

(9)Vista Hospital Systems, Inc. and French Hospital Medical Center and Universal Health Systems, Submission to the Attorney General, Section 13.15 "Maintenance of Charity and Indigent Care Policies."

(10)Cal. Welf. & Inst. § 17000 (Deering, 2003).

(11)Cal. Health & Safety § 101836 (2003).

(12)See Appendix A (Comparison of CMSP Patient Days, Comparison of CMSP Outpatient Visits, Comparison of CMSP Discharges).

(13)See Appendix B (Percentage of Medic-Cal to Total Patient Days and Outpatient Visits).

(14)See Appendix C (Charity Care as a Percentage of Gross Patient Revenue).

(15)"Uninsured Californians in Assembly and Senate Districts, 2000," UCLA Center for Health Policy Research, E. Richard Brown, Ying Ying Meng et al (May, 2001).

(16)"Uninsured Californians in Assembly and Senate Districts, 2000," UCLA Center for Health Policy Research, E. Richard Brown, Ying Ying Meng et al (May, 2001).

(17)"Tenet Pledges Fair Treatment, Discount Prices for Uninsured," Tenet Press Release, January 28, 2003.

(18)Id.

View Files Sorted By Office: Consumers Union OPI, New York - Washington DC Office
West Coast Regional Office - Southwest Regional Office - Consumer Policy Institute

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