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In New York, a new law requires that the state incorporate a health equity analysis into its review of proposed health facility changes, especially those that would reduce, eliminate, or relocate care. The law is perhaps the most ambitious model of how some states are working to identify and address potential negative impacts of hospital mergers, closings, and downsizing, especially in rural areas and in low-income urban neighborhoods of color.
Sixty-five hospitals across the United States have moved to close some departments or services so far in 2023, citing financial concerns or staffing shortages, according to Becker’s Hospital Review. Moreover, 600 rural hospitals are at immediate or high risk of closure. Hospital maternity services have been especially hard hit. The March of Dimes reported recently that 36% of U.S. counties – 61% of which are rural — qualify as maternity care deserts.
The first test of the New York State health equity impact assessment law led an upstate health system to delay its planned closure of a hospital birth center and begin meeting with the affected community to try to address negative consequences for medically underserved people that were identified through the assessment. Meanwhile, other states are strengthening their market oversight laws and procedures to help ensure equity and manage health care costs.
The New York state law, which went into effect in June of this year, was prompted by health advocates’ recognition that the closing of more than 40 hospitals and downsizing of many others in recent decades had left some communities without adequate access to needed medical care when COVID hit the state hard in early 2020. Advocates also cited specific harms from closures of maternity services, emergency departments, and psychiatric in-patient services at hospitals that had been acquired by large systems.
The law requires health facilities to commission assessments of how proposed changes — especially elimination, reduction, or relocation of services — would affect access to care for medically underserved people. “Medically underserved” is defined to mean people with low incomes, uninsured and publicly insured people, racial and ethnic minorities, women, LGBTQ+ people, people with disabilities, rural residents, and older adults.
The state Department of Health’s new Office of Health Equity and Human Rights worked with both health advocates and health facility representatives to craft implementing rules and procedures. The assessments must be conducted by independent entities with expertise in health equity and without an interest in approval of the proposed project. The assessments must be submitted to the state health department along with Certificate of Need (CON) applications seeking approval for proposed changes. “Meaningful engagement” of the affected community — such as through surveys, community forums and interviews with key stakeholders — is required.
The application by St. Peter’s Health Partners, which is part of the national Trinity Health system, to close the Burdett Birth Center at Samaritan Hospital in Troy, N.Y., was the first test of the law. In Troy, nearly one-quarter of the residents live in poverty and 22% have no car. The birth center also serves a large rural area encompassing three counties.
The system submitted a state CON application to close the center two days before the new health equity law went into effect, but then commissioned the equity assessment voluntarily in response to public criticism. Among the findings released October 23 were that low-income pregnant people without cars would face “transportation barriers” in traveling to other hospitals. The report also cited general concern about “the health and safety of patients, the strain on local EMS, the ability for other area hospitals to absorb the additional maternity beds, and the loss of local jobs.” Moreover, the assessment by The Chartis Group consultants predicted that loss of the midwife collaborative model of care at Burdett “could result in health inequities.”
The Save Burdett Birth Center Coalition conducted its own community-led health equity impact assessment of the closure at the same time as the Chartis study and concluded there was no practical way to mitigate the likely harm to medically underserved people. They urged St. Peter’s to instead invest in Burdett’s model of care, which has met state maternal health priorities, including having the lowest C-section rate of any local hospital. St. Peter’s executives announced they would delay closure of the Burdett Birth Center until the spring of 2024 and begin meeting with the affected community to try to find ways to address the transportation obstacles and other issues.
If St. Peter’s continues toward closing the unit, the system will need to submit a closing plan to the state Department of Health for approval that explains how it would mitigate the negative identified impacts on medically underserved people. Meanwhile, state Attorney General Letitia James has held a public hearing on whether the non-profit hospital was violating its charitable mission by trying to close maternity services. Local and state legislators representing the Burdett service area have been investigating potential ways to save the birth center.
Other states have also strengthened oversight of health industry consolidation to prevent price increases from loss of competition and address health equity concerns. The National Conference of State Legislatures reported that, in 2023, at least four more states added or increased requirements for health facilities to notify state officials of proposed mergers or other contractual affiliations.
A new Minnesota statute authorizes the state Attorney General to seek court action prohibiting or unwinding a transaction if it is not in the public interest, which is defined to include that it “will reduce delivery of health care to disadvantaged, uninsured, underinsured, and underserved populations and to populations enrolled in public health care programs.”
In 2021, Oregon Gov. Kate Brown signed HB2362 into law, giving the Oregon Health Authority (OHA) jurisdiction over large-size proposed mergers, acquisitions and affiliations. The authority can deny approval if the applicants cannot show that the transaction would increase access to services in medically underserved areas, improve health outcomes or reduce patient costs. Transactions that would cause a loss of services essential to achieving health equity receive special scrutiny.
Since the law went into effect in March 2022, OHA has reviewed 10 transactions. Health advocates expect the first real test of the law to be review of the planned acquisition of the Legacy Health System by the Oregon Health Sciences University.
Connecticut has a robust existing process for review of proposed health industry transactions. In late August, state Office of Health Strategy (OHS) rejected the Nuvance Health System’s plan to close the maternity unit at its Sharon Hospital, located in the rural northwest corner of the state. Nuvance is appealing that ruling.
Given the rapid pace of hospital mergers, closures and downsizing, health industry consolidation is likely to attract new attention in state legislative sessions come January of 2024. There is also potential for action at the federal level. President Joe Biden’s executive order on industry consolidation led to examination of the impact of health industry consolidation on access to services, as well as prices. The Federal Trade Commission is also revising its guidelines for review of proposed mergers and acquisitions and has received suggestions that it incorporate the New York model of health equity impact analysis.
While the outcomes are still uncertain, the federal government, along with several state governments, are starting to take policy actions to protect communities from service closures that often come with health industry consolidation.
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