Before the NACo Health System Reform Working Group

Wake County (Raleigh), North Carolina

February 19, 2009

Good morning. President-elect Brown, it is a pleasure to participate in the NACo Health System Reform Working Group and to report to you today on the work of NACo’s County Hospital Task Force. I thank you for the opportunity to share more about our discussions and recommendations.

My name is Gregg Goslin, and I am a commissioner from Cook County, Illinois and the chair of the County Hospital Task Force.

NACo’s County Hospital Task Force was formed by President Eric Coleman in 2007 to study best practices in operations, identify common issues, and develop recommendations to address challenges that face all counties operating hospitals.

Over 600 hospitals nationwide are owned or operated by counties or jointly by cities and counties, providing services for all patients, including the uninsured and underinsured, regardless of ability to pay. These programs offer a “safety net” to those most in need in our community at a time when oppressive health care expenses are forcing some officials to consider decreasing or even eliminating services. Recently in the news have been reports of hospitals that have closed in direct response to this pressure, creating a desperate situation for those without any other healthcare resources and stressing existing resources.

Our Task Force is composed of a diverse mix of county officials. Now in our second year of work, we have conducted site visits and case studies of five outstanding hospital/healthcare systems and held 7 meetings to discuss our findings. As an aside, our hosts may be interested to know that one of the premier site visits we held was in Charlotte, organized by Mecklenburg Commissioner Norm Mitchell and featured the Carolinas HealthCare System and we were quite impressed with what we learned here.

Many counties operate hospitals, and whatever its size, the issues are often similar. We began by looking at various governance, operations and funding models.

One of our very first steps was to survey key counties operating hospitals to develop a baseline of commonalities for attention. I am sure that many of the issues that were immediately identified have been brought up in previous testimony to this Task Force as well and include:

A rising number of uninsured and underinsured
The increasing number of uninsured patients mean additional stress on hospital emergency rooms, as those needing non-urgent care for concerns such as ear infections and strep throat turn to the emergency rooms – one of the most expensive way to provide services and adding wait time to all who are there;
Funding issues continue to dominate discussions – looming Medicaid cuts – a major source of revenue to many public hospitals - that would result for example, if CMS regulations eliminated Graduate Medical Education payments or further limited Disproportionate Share Hospital (DSH) payments;
Nursing shortages and lack of recruitment and training tools to develop the health care workforce;
State policy definitely impacts on the county’s ability to provide and fund services: counties in many states report federal funds get “siphoned” off as the state reallocates funds;

Our Task Force quickly determined that there is no “one size” solution to the challenges that are common to all; each community has its own unique history, culture, environment and needs. However, from the site visits and survey results, we do believe that we can make several relevant recommendations:

Successful county hospitals have often been given an independent governing board is crucial, with the county providing oversight but not involved in day to day management. In this role, the county representative acts as the liaison for the tax payer.
Successful county hospitals have grown beyond their 19th century origins as institutions providing “charity care” and compete in the healthcare marketplace as providers of choice. Seeking a more diverse patient mix by increasing the number of private pay patients is important as the payment-to-cost ratio helps cover the deficit of Medicare/Medicaid patients or bad debt and enables the safety net mission to be sustainable with less direct county subsidy.
Successful county hospitals and their county elected officials effectively engage their governors and legislators as partners in fulfilling the safety net mission. This helps to ensure that federal resources flow appropriately to the hospitals.

Finally, we hope that the Health System Reform Working Group will consider and forward to NACo’s Health Steering Committee some of the following federal policy proposals:

NACo should reaffirm its commitment to a strong Medicaid system including a more generous DSH program. Even as we join the movement for more universal health care coverage, we must not allow the safety net infrastructure to be undermined. Therefore, we strongly endorse the draft white paper section entitled “Maintaining the Safety Net”.
NACo should support a review of the federal tax-exemptions for not-for-profit hospitals. To meet a local community’s healthcare need, we have seen that it is often necessary to shift - legally, ethically and responsibly - some indigent care from the county hospitals to other institutions. Hospitals which enjoy federal, state and local tax-exempt status should have a meaningful commitment to community benefit. Currently in many states it is less than 4%. Changing the requirements for tax-exempt status would clarify and quantify the amount of charity care a hospital must provide to maintain its tax-exempt status.

Finally, Madam Chair, the Task Force hopes to hold a workshop at the NACo Annual Conference regarding the Future of County Hospitals to share what we’ve learned with our fellow county officials and their hospital administrators. Our goal is to showcase “lessons learned” and some key recommendations during a panel presentation.

Again, it has been an honor to serve and to report on the good work of my colleagues on the County Hospital Task Force.