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New Delaware legislation to review hospital budgets may only create new bureaucracies and problems

May 16, 2024
An op-ed by Robert Kerwin

It is well understood that healthcare systems in the United States are navigating an ever-challenging operating environment. In the wake of the COVID-19 pandemic, increased costs, tightening labor markets and lagging reimbursement rates — all have contributed to significant financial stresses on the national healthcare system. In Delaware, like many other states, between Medicaid and the state’s insurance plan, as recently noted by the Delaware Governor, it faces ever-increasing healthcare costs.

To address the dilemma, some Delaware legislators have introduced into the Delaware General Assembly legislation that would establish a "Diamond State Hospital Cost Review Board". This Review Board would require Delaware hospitals to submit a proposed budget to the board for approval. The Board would consist of five members — three appointed by the governor, one member appointed by the speaker of the Delaware House of Representatives and one member appointed by the president pro tempore of the Senate. The hospitals would be required to submit a budget for the upcoming year detailing expenditures and revenues, wage and salary data, assets, liabilities and scope of services. It would also require inpatient services, outpatient services, auxiliary services, utilization information and new hospital services and programs proposed for the coming year. A hospital’s violation of standards created by the review board could be subject to enforcement procedures including the potential of a civil penalty of up to $500,000. These standards appear to include (for now) a requirement to provide information related to the budget review process. The Diamond State Hospital Review Board would be a public body subject to "open meeting" law requirements analogous (for transparency purposes) perhaps to open meeting law requirements of state and municipal boards.

The original legislation was viewed by the Delaware Healthcare Association as of "deep concern." This legislation has now been modified. Apparently, some of the more egregious provisions have been removed. However, one can observe from the association’s most recent public statements that it is still not happy, and appropriately so.

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