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Gov. Carney signs HB 350, creates Diamond State Hospital Review Board

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Governor John Carney has signed a bill that will create a board to oversee hospital expense reports. | PHOTO COURTESY OF UNSPLASH/HUSH NAIDOO JADE PHOTOGRAPHY

DOVER — The much-debated Diamond State Hospital Review Board will soon start evaluating some hospital budgets and quality benchmarks in an effort to lower healthcare costs across Delaware.

Governor John Carney signed House Substitute 2 for House Bill 350 into law on June 13, effectively creating the eight-member board, seven of which are voting members while the President and CEO of the Delaware Healthcare Association (DHA) will act in an advisory role as the eighth and non-voting member.   

“Rising health care costs are having a significant impact on Delaware families and state taxpayers, and we’ve been committed to addressing this since the start of my time as Governor,” he said in a press release. “HB 350 will help lower the growth of health care costs in our state, while making sure we’re protecting health care quality and access. I want to thank the hospital systems, members of the General Assembly – particularly HouseSpeaker Longhurst and Sen. Bryan Townsend – and the Department of Health and Social Services for collaborating on this important piece of legislation that will make a positive impact on Delawareans.”

Under HB 350, members of the new board must be knowledgeable in health care policy and delivery to include business, finance or accounting knowledge and must possess “knowledge, experience, and characteristics that complement those of the remaining members of the board.” 

Members must also remain impartial and “free from undue influence by a personal, business, or professional relationship with any person subject to supervision or regulation by the board.”

During sometimes intense discussions at Legislative Hall as HB 350 was explored by legislators, hospital leaders across the state vowed to continue working collaboratively on cost-related issues.

DHA President and CEO Brian Frazee said that now that the bill is signed, his organization will work as an advocate to “ensure that the law’s implementation enables Delaware’s hospitals to continue providing high-quality care to the patients and communities we serve.”

“We are proud that Delaware currently ranks No. 2 in the nation for hospital quality and we will strive to ensure access to care for all Delawareans, strengthen the healthcare workforce, and advance health equity as the regulatory and implementation process moves forward,” Frazee added.

Delaware’s largest hospital systems, including TidalHealth, Beebe Healthcare, Bayhealth and ChristianaCare, will all be subject to upcoming financial and performance improvement plan reviews per this new legislation for their 2026 fiscal year.

While leaders wait for board appointments and the review process to begin, those hospital systems will have to cap costs through 2026 at no greater than 2% or core consumer price index plus 1% over rates from the previous year, among other restrictions.

HB 350 was among the most controversial issues heard in legislative hall this session, with hospital leaders rallying employees and launching a public relations campaign against it. The debate eventually softened initial requirements to have hospitals submit budgets for approval in the first year. Instead in 2025, those budgets will be submitted for review only.

Those hospital systems who do not meet the benchmarks in the next two years will have to submit performance improvement plans. Those who do not submit financial reports could face civil fines up to $500,000.

“This legislation is a major breakthrough for small businesses and working families in Delaware, who for years have been paying more for healthcare than people in nearly every other state,” Townsend said in a prepared statement. “By bending the curve of spiraling healthcare costs, we are helping Delawareans make ends meet in their own family budgets, while ensuring that the hospital systems they depend on can continue to provide the same level of quality care.”

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