House sends hospital review board bill to Carney

A bill that will create a board to oversee hospital systems’ financials has passed the House and now heads to Gov. John Carney, who said he will sign it. | PHOTO COURTESY OF UNSPLASH/HUSH NAIDOO JADE PHOTOGRAPHY

DOVER — After weeks of contentious debate between hospital executives and lawmakers, the Delaware House of Representatives passed House Bill 350 with amendments Tuesday afternoon that will create a state-appointed board to oversee hospitals budgets in a bid to reduce costs on the patients.

The bill, which was sent back to the House after new amendments were introduced last week and passed the State Senate, passed along mostly party lines, although Rep. Sean Lynn (D-East Dover), Rep. Sean Matthews (D-Brandywine) and Rep. Stell Parker Selby (D-Milton/Lewes) voted against it. The final vote was 21-16, with four legislators absent.

“For far too long, Delawareans have been burdened with some of the highest healthcare costs in the nation,” House Speaker Valerie Longhurst (D-Bear) said in a prepared statement. “These costs not only limit residents’ ability to access necessary care but also strain family budgets, leaving less money for essentials like groceries and housing.”

“With the final passage of HB 350, we took an important step to get rising healthcare prices under control while bringing much needed transparency to our hospital pricing,” she added.

HB 350 creates the Diamond State Hospital Cost Review Board, a seven-member board that will examine hospitals budgets, audits and other related financial information. The board will focus on whether the state’s seven hospitals remain close to health care spending benchmarks.

The most recent amendments have changed what benchmarks are used. House Speaker Valerie Longhurst (D-Bear), who sponsored the bill, drafted that health care costs must meet the health care spending bench mark established by Gov. John Carney’s administration in 2018. 

State health officials have set the benchmark at 3% in 2022, while health care spending per capita rose 6.3% for the same year. However, the Delaware Economic and Financial Advisory Council (DEFAC) voted earlier this week to raise the health care spending benchmark to 4.2%, citing staggered inflation.

However, after being faced with weeks of contentious debate from health care executives and a massive public relations campaign from Delaware’s major hospitals that included television, radio and internet advertisements, the cost index was changed. 

In 2025 and 2026, the state will set the benchmark at either 2% growth or the core consumer index plus 1% over the previous year’s rate, whichever is higher. In the following years, the benchmark will be tied to the health care benchmark established by DEFAC.

Other provisions made since HB 350’s introduction was that the board will only review information in 2025 and would require hospitals who do not meet the benchmark to start a performance improvement plan. The Diamond State Hospital Cost Review Board will also not have the authority to seize hospital assets.

But hospitals who fail to submit the financial reports and follow the law could face a civil fine of $500,000.

Before the floor vote, House Republicans questioned whether the bill would require a two-thirds majority vote, or 27 members, to pass it. Rep. Mike Ramone (R-Pike Creek) and Rep. Bryan Shupe (R-Milford) questioned whether HB 350 would override the hospitals board of directors, and the state’s constitution indicates amending corporations would require the two-thirds vote.

However, House Attorney Karen Lance pointed out that this bill establishes a board to review financial information, not superseding hospitals decision-making processes.

“This is a regulatory board performing a regulatory function,” Lance said. “There are other boards that manage other industries that do something not exactly the same but similar. And I would also point out that this is not actually even the last step in this process.”

HB 350 also grants hospitals the ability to appeal the board’s decision.

Still, others like Rep. Mike Smith thought the issue would head to the courts. He also took issue with the fact that the Diamond State Hospital Cost Review Board would be politically-appointed. The board would have most of its members appointed by the seated governor.

“I have to double down on the point that all hospitals are different with different needs,” Smith said. “I am going to trust them and the people that have been in the community to oversee things. … I don’t believe that putting a politically-appointed board is going to best serve the health needs of Delaware.”

In a statement issued Tuesday evening, Carney lauded the bill’s passage as a way to work to reduce health care costs in Delaware. He thanked the hospital system leaders, state health officials, the General Assembly and Longhurst and Sen. Bryan Townsend (D-Newark/Christiana) for their efforts to pass the bill.

“Rising health care costs are having a significant impact on Delaware families and state taxpayers… I look forward to signing it into law.” Carney said.