[Feb. 18, 2014] SACRAMENTO, Calif. – The state’s largest union of hospital workers has asked California Treasurer Bill Lockyer to initiate a study of the disclosures California’s non-profit hospitals make to bond markets about the impact of federal and state healthcare reform.
SEIU-United Healthcare Workers West made the request today in a letter to the California Debt and Investment Advisory Commission (CDIAC) after its own survey revealed uneven levels of disclosure. In its letter, SEIU-UHW said it believes the CDIAC has the authority to pull together all parties and develop improved guidelines for disclosure by public and non-profit health systems.
Almost all disclosures fail to provide specific analysis as to how reform will affect the particular borrower, or identify steps the health system is taking to prepare for health care changes brought on by the Affordable Care Act and pending changes at the state level, the union said.
“Properly functioning credit markets are critical to our hospitals’ success and we believe improved disclosure will help markets function more efficiently and ultimately improve the financial viability of our employers,” said SEIU-UHW President Dave Regan. “Healthcare reform is going to have a dramatic impact on healthcare consumers as well as employers and healthcare workers, and all parties need honest and accurate information to make decisions and determinations.”
As a specific example of how disclosure is lacking and needs to be addressed, the union cited health system communications with the bond market regarding two SEIU-UHW-sponsored ballot measures that are on track to appear on the November 2014 ballot. The ballot measures are part of an effort by SEIU-UHW to lower healthcare costs and improve the health of Californians. The two ballot measures are:
- Charitable Hospital Executive Compensation Act of 2014: Prohibits nonprofit hospital executives in California from receiving more than $450,000 in annual compensation – the same amount received by the President of the United States. Many top executives in the state’s non-profit hospitals make more than a million dollars a year.
- Fair Healthcare Pricing Act of 2014: Prohibits hospitals from charging more than 25 percent above the actual cost of providing patient care. On average, California hospitals charge 320 percent more than the actual cost of providing care in their facilities.
The California Hospital Association is claiming publicly that the Fair Healthcare Pricing Act would “severely harm” its membership and cost hospitals about “$12 billion a year” (Modern Healthcare, Feb. 12, 2014). And a number of employers are claiming that hospitals will go bankrupt if the initiatives pass.
However, SEIU-UHW has not found any hospitals or systems that have released disclosures to the bond market making similar claims of potential bankruptcy. Further, a number of health systems are going to the bond market and releasing new marketing materials that do not warn of any such extreme financial hardship.
One example is Sharp HealthCare, which filed its official statement for a $159.5 million bond offering on Jan. 23, 2014. The system notes the ballot measures as potential risks but does not warn municipal investors of anything approaching the scale or magnitude being claimed in press statements by the hospital industry.
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Paid for by Yes for a Healthy California, sponsored and major funding by Service Employees International Union, United Health Care Workers West. Additional major funding by State Council of Service Employees Issues Committee.