Regionalized hospital care faces hurdles

AUGUSTA – Maine appears headed toward a system of regionalized hospital care, despite challenges posed by state and federal antitrust laws, the specter of creating an additional layer of state bureaucracy and the likelihood of community hospital foot-dragging.

Members of the Commission to Study Maine Hospitals, a task force established last year as part of Gov. John Baldacci’s Dirigo Health reform initiative, heard Monday that changing the way hospitals deliver services and relate to each other is imperative – even thoughthe process of creating that change promises to be thorny.

The Dirigo reforms are still in the planning stages, with half a dozen groups studying intertwined issues and expected to make recommendations to the Governor’s Office of Health Policy and Finance before the end of this year.

The hospital commission is examining the role hospitals play in their respective communities and as part of the state’s health care delivery system.

The commission is looking for ways to cut Maine’s high per-patient costs and improve care – probably by including all of the state’s 39 hospitals in one of two or three geographic “hospital regions” with shared clinical and administrative functions.

State and federal laws often take a dim view of such collaborations. Existing multi-hospital groups, such as Eastern Maine Healthcare Systems in Bangor or MaineHealth in Portland, allow for the presence of non-affiliated facilities in their territories.

Since consumers have a nominal choice about where to get their health care services, competition and consumer choice are preserved and the hospital systems are not challenged.

Other collaborations cross an ill-defined line. Last year’s federal antitrust investigation of the Maine Health Alliance – a group of northern and eastern Maine hospitals and doctors that were negotiating collectively with insurance companies – resulted in a hefty fine.

Monday’s meeting drew private health care lawyers and representatives of the state Attorney General’s office.

Augusta attorney Joe Kozak said the Federal Trade Commission and the Department of Justice protect competition between businesses as an incentive for lower costs and higher quality.

Poor rural states where competition may be more of an impediment than an incentive are no exception, he said, and hospitals that violate antitrust regulations by eliminating competition are vulnerable to pricey lawsuits.

“The DOJ and the FTC are on a mission in rural states to show that federal antitrust laws apply in Maine just like they do in Houston,” Kozak said.

Other legal considerations pose obstacles to hospital consolidation, including the tax code, interstate commerce laws, medical staff privileges and medical liability issues, he said.

If Maine is going to successfully challenge state and federal antitrust statutes, Kozak said, it must articulate clearly an alternate policy and show how the proposed collaboration will do a better job of protecting consumers.

The state must also provide a mechanism for supervising the non-competitive system, Kozak said. Given health care’s unique complexities, he cautioned, it would take “a very sophisticated state agency” to provide appropriate oversight.

Commission Chair William Haggett, former CEO of Bath Iron Works, said he’d prefer to avoid creating a “huge state bureaucracy” but would move toward a regional model despite the obstacles.

“It would be easier to give up and do nothing until we have a revolution in health care like we have in taxation,” Haggett said, a reference to the recent voter referendum supporting major property tax revision. “But the fact is, we have a broken system that requires dramatic change.”

Portland attorney Charles Dingman said, “Competition is not enough to make the health care system work in Maine … the state needs to go forward with an awareness of the obstacles, but it needs to go forward nonetheless.”

Some aspects of the collaborative system under consideration would be allowed under the state’s 1991 Hospital Cooperation Act, including shared administrative tasks such as billing, payroll and the maintenance of electronic medical records, according to Assistant Attorney General Christina Moylan.

But a regional system that rations clinical services, deciding which hospitals can perform certain procedures, would require additional legislation, she said.

Moylan and others from the AG’s office offered to work with commission members and federal regulators to craft a preliminary proposal that would answer state and federal concerns.

The Commission to Study Maine Hospitals meets weekly. More information on the Dirigo Health initiative, including scheduled committee meetings, is available on line at www.dirigohealth.maine.gov.