At First “Virginia Hospital Lobby Day,” Hospitals Voice Support for Health Care Policies Including COPN Reforms and Additional Health Care Funding

January 20, 2016

Virginia Hospitals Ready to Work with Policymakers to Protect 115,000 Hospital Jobs and $36 Billion in Positive Economic Activity While Facing Unfunded Mandates, Federal Funding Cuts Approaching $1 Billion Annually by 2021

RICHMOND, VA – Representatives from hospitals and health systems across the Commonwealth, from administrators to clinicians, gathered at the State Capitol today in support of a health care policy agenda that protects the substantial economic and public health benefits Virginia’s local hospitals and health systems provide for the communities they serve. The health care stakeholders assembled for a daylong series of events as part of the First Annual Virginia Hospital Lobby Day.

During a news conference held as part of the Lobby Day activities, leaders from several hospitals which serve urban, suburban, and rural communities spoke about the importance of advancing common sense policy solutions that preserve stability for Virginia’s health care network so that Virginians continue to have access to necessary medical care. Among the policy concepts favored by local hospitals are reform of Virginia’s Certificate of Public Need (COPN) laws that enhance the current process while keeping it intact, and proposals to shore up health care funding in the Commonwealth.

Lobby Day events were coordinated by the Virginia Hospital & Healthcare Association (VHHA), an alliance of 107 hospitals and 30 local health systems. Collectively, those members provide 115,000 good-paying hospital jobs totaling roughly $8 billion in payroll. As some of the largest employers in the state, hospitals generate $36 billion in positive economic activity for the Commonwealth, and support local economies by spending $17 billion on goods and services with local businesses. Those benefits are threatened by unfunded government mandates and federal funding cuts affecting hospitals which are forecast to approach $1 billion annually by 2021.

“Virginia hospitals are vital pillars of our communities. They help keep our economy going as major employers and frontline health care providers,” said James B. Cole, President and CEO of Virginia Hospital Center in Arlington and Chairman of VHHA’s Board of Directors. “Health care accounts for 1 in 9 Virginia jobs. And federal data show that health care jobs are expected to account for major employment growth in the coming years. Yet these positives are at risk due to unfunded mandates and deep funding cuts that affect hospitals. We continue to communicate with the public and policymakers about those stakes as we engage in efforts to promote common sense health care policies in Virginia.”

One health care policy topic Virginia hospitals are focused on is COPN. Virginia’s longstanding COPN laws help to address the demands of complying with care mandates that create financial challenges. They also support the health care safety net in the Commonwealth. COPN exists to control health care costs and prevent over-expansion the market can’t support, and to help offset offset charity care costs largely borne by hospitals. Given that, VHHA supports meaningful COPN process reforms to protect health care access and affordability in Virginia. That is in line with the recommendations of a state work group formed under the direction of the Virginia General Assembly, which recommended process reforms, but did not endorse COPN repeal.

“Eliminating COPN would weaken many hospitals throughout Virginia by allowing new entrants to cherry pick and provide only the most profitable types of care, making the remainder of services a community needs – services that often operate at a loss – the full burden of the community hospital,” said Mary N. Mannix, President and CEO of Augusta Health in Fishersville and Vice Chair of VHHA’s Board of Directors. “This handicaps a strong community hospital by diminishing its financial strength and ability to fully fund community charity care and mission critical services that operate at a loss.”

In recent years, the impact of unfunded mandates and funding cuts on hospitals is equivalent to billions of dollars. In an effort to relieve those conditions, Virginia’s hospitals recently expressed openness to conditionally contribute more to support health care. Virginia hospitals historically have opposed such provider assessments. In December, hospitals outlined six firm conditions under which they would be open to contributing more to support state health care by enabling Virginia to draw down additional federal funding to address current challenges. The concept is flexible enough that it could be used within the existing Medicaid program to increase reimbursement rates, or to cover the state costs associated with helping more uninsured Virginians obtain health care coverage.

“One option to enhance health care funding in Virginia and spare the public additional costs is to infuse new resources in the system. In the current climate, Virginia hospitals have come forward with a way to inject funding into the system,” said John Fitzgerald, a Vice President of Inova Health System and the immediate past Chairman of VHHA’s Board of Directors. “Hospitals did not come to this decision lightly. We continue to believe the state should cover these costs. Since there is concern about that, hospitals have discussed making contributions to draw down additional federal funds. This is a fiscally sound option for the state. But hospitals would only support this approach if there is private sector control of the contribution program, funds are walled off for health care only, there is rate protection for the current Medicaid program, and assurances that any savings go to help struggling rural hospitals.”

“Unfunded mandates and funding cuts can be devastating on hospitals’ finances. The statistics show the problem is real. And that should concern Virginians who care about the economy and health care access,” added Rear Admiral (ret.) Alton L. Stocks, M.D., Chief Operating Officer of Chesapeake Regional Medical Center. “Over the past several years, an average of one-third of Virginia acute care hospitals had negative operating margins year-over-year. Among rural hospitals, the average was one-half of hospitals in the red. Many of the pressures hospitals face are related to federal decisions. But not all are. Hospitals have endured declining Medicaid reimbursement rates for years. The current proposed state budget calls for eliminating inflation adjustments for inpatient and outpatient hospitals. That action alone would amount to hospitals being deprived of $94 million in general and non-general funds they should receive over the biennium. No amount of conservative hospital administration can overcome such conditions without some potential impact on hospitals’ economic contributions and patients’ access to care.”

With so many important health care policy considerations pending before the Virginia General Assembly, local hospitals and health systems and the people they employ, local businesses whose livelihoods are tied to a vibrant health care system, and VHHA and its members stand ready to engage in positive public policy deliberations to improve access to care, lower health care costs, and enhance the health status of all Virginians. Virginia’s local hospitals and health systems look forward to working with the Governor and the Virginia General Assembly to address these common goals.

About VHHA: The Virginia Hospital & Healthcare Association is an alliance of 107 hospitals and 30 health delivery systems that develops and advocates for sound health care policy in the Commonwealth. Its vision is to achieve excellence in both health care and health.

Julian Walker
Vice President of Communications
(804) 297-3193 office
(804) 304-7402 mobile