Category Archives: Health care

Will Virginia COPN Study Group Ask the Critical Questions?

Data source: Virginia Department of Health

Data source: Virginia Department of Health

by James A. Bacon

State Certificate of Public Need (COPN) programs come in many shapes and sizes across the United States. Fourteen states have abolished the health-care regulatory program entirely, while states that continue to regulate capital investments in health care facilities and high-end equipment vary widely in what they regulate.

Among states with COPN, Virginia regulates about 19 of 30 categories of medical services, placing it in the middle of the pack for regulatory intensity, according to a state-by-state comparison presented to Virginia’s COPN work group earlier this month. Virginia’s application fees are relatively modest, but the review process, at 190 days, is the longest in the country.

The work group is studying Virginia’s COPN law to determine if it needs reform, in light of the enactment of the Affordable Care Act and other changes in the medical marketplace. The justification for COPN when it was instituted nationally in Virginia in 1973 was that normal competitive processes did not work in health care. When hospitals and other providers added hospital beds and purchased high-tech equipment, they supposedly made sure that patients utilized them, which added to the run-up in health care costs.

However, critics of COPN argue that the cost-plus system for reimbursing providers, which created financial incentives for providers to over-diagnose and over-treat patients, is no longer prevalent. The primary justification cited now for COPN is that by restricting competition, it shores up hospital profits and guarantees as a condition of receiving a certificate that hospitals will provide charity care for thousands of Virginians lacking insurance.

Virginia Secretary of Health and Human Resources Bill Hazel explained the logic of the national survey this way: “Do we know anything about … what actually happens in states where there has been deregulation?” (See the Richmond Times-Dispatch coverage here.)

Those are worthwhile questions to start with, but the study group needs to delve a lot deeper. One question I would ask is this: Does Virginia’s COPN really accomplish anything? The chart above, based upon Virginia Department of Health data, shows the dollar value of COPN applications approved and denied. Virginia approves the overwhelming majority of applications, a trend that has become especially evident since 2009. If the COPN reviews are just rubber-stamping applications, what’s the point in reviewing them at all? Alternatively, does the COPN process discourage entrepreneurs from even submitting proposals to a process they deemed to be rigged in favor of established players?

The chart raises another question: What accounts for the dramatic fall-off in health care-related capital spending in Virginia since 2009? We can’t blame it on the 2007-2009 recession, a period during which hospital spending actually peaked. Arguably, spending tanked as a reaction to uncertainty created by the enactment in 2010 of the Affordable Care Act (Obamacare). But even that explanation begs another question: Why has capital spending remained so low in subsequent years when regulations have been written, the law applied and uncertainty is less prevalent? Have Obamacare or changes in the commercial health insurance market created incentives to restrain capital spending? And, if so, why would we still need COPN?

I would add an even more fundamental set of questions: What impact has COPN had on health care productivity in Virginia? The health care sector is notorious for its low level of productivity growth, an underlying cause of escalating health care costs. There are two schools of thought. The first is that maximizing utilization of a restricted supply of beds and equipment, which COPN is designed to do, will lift productivity. The countervailing theory is that the path to greater productivity lies in embracing new processes, which often entail redesigning the physical layout of hospital floors or even building specialized, dedicated facilities. COPN would slow such changes. Which school of thought is right? Without more evidence, we don’t know.

The debate over U.S. health care focuses overwhelmingly on who pays. It’s a zero-sum game of slicing up a fixed pie so that some get bigger pieces and others get smaller pieces. The only way out of this morass, to borrow a hoary cliche, is to grow the pie — to make more health care available at more affordable prices for all. One way to do that is to overhaul the way health care is delivered: to evolve from a system dominated by general-purpose hospitals that provide a wide range of services to one that includes focused factories specializing at performing a narrow range of procedures exceptionally well and exceptionally efficiently.

That’s not happening. Rather than encouraging entrepreneurial specialization and experimentation, the health care industry is consolidating. Both the insurance and hospital sectors are becoming cartels, and they’re absorbing independent physician practices. The causes are bigger than COPN alone. But COPN may contribute to the trend. The big-picture question Virginia policy makers need to ask is this: Do we want cartels or entrepreneurs to dominate state health care? I don’t hear anyone asking that question.

Hospital Rankings and Economic Development

VCU Medical Center complex in downtown Richmond, a driver of the regional economy.

VCU Medical Center complex in downtown Richmond.

by James A. Bacon

U.S. News & World-Report has issued its 2015-2016 ranking of the nation’s “best hospitals,” and Virginia has four hospitals with at least one adult specialty receiving a “national” ranking. The online publishing company bills the ranking as a tool to help patients select hospitals that can best treat complex illnesses. But it also prompts questions about the role of hospitals as agents of economic development.

Hospitals are major employers and generators of economic activity in every community they serve. While some hospitals cater to local markets exclusively, some have such a reputation for excellence in certain specialty practices, from cancer to heart disease, that they draw patients from around the state, the nation or even the world. To the extent that a hospital draws patients from elsewhere, it can be said to be “exporting” services and making a contribution to local jobs and economic activity.

Thus, Massachusetts General, rated the best hospital this year, excels in everyone of the 16 specialties covered by U.S. News & World-Report and three pediatric specialties. The hospital employs 2,889 doctors, many of whom are highly compensated specialists, not to mention a host of nurses, technicians, administrators and others. Its reputation as one of the best research hospitals in the world brings in “thousands” of international patients — so many that the hospital maintains a dedicated “international patient center.” No wonder that Mass General is an anchor of the Boston regional economy.

Accepting the proposition that hospitals can be big contributors to regional economies over and above their contribution to public health, how do Virginia’s hospitals shake up? Here’s the score:

Virginia Commonwealth University Medical Center
National ranking in 3 adult specialties, one pediatric specialty
Doctors: 454

Sentara Norfolk General
National ranking in 2 adult specialties
Doctors: 694

Inova Fairfax
National ranking in 1 adult specialty, two pediatric specialties
Doctors: 1,689

University of Virginia Medical Center
National ranking in 1 adult specialty, 4 pediatric specialties
Doctors: 609

Sentara_Norfolk_General

Sentara Norfolk General Hospital

How significant are those rankings? That’s hard to say. There are nearly 5,000 hospitals across the United States. U.S. News & World-Report uses a methodology that combines metrics such as hospital volume and risk-adjusted survival rates for complex cases and supplements them with a physician survey of hospital reputations. To be awarded a “national” ranking, a hospital must score within the top 50. In other words, that puts VCU in the top 1% for three adult specialties and one pediatric specialty. The publication does not publish the numbers behind the scores, so there is no way to tell if VCU’s specialties rank No. 1 in the country or No. 50.

U.S. News and World-Report focuses on 16 adult specialties. With 50 hospitals recognized for each specialty, a total of 800 total hospital specialties are recognized. Only seven of those are located in Virginia. To put that in perspective, Virginia has 2.6% of the nation’s population, 3.3% of its GDP but only 0.9% of its nationally ranked hospital specialties.

These are very rough numbers that are undoubtedly subject to criticism. But they suggest to me that Virginia’s hospitals are an under-performing economic sector. If hospitals achieved a level of excellence commensurate with Virginia’s population and GDP, there would be far more centers of excellence in the state, along with more highly compensated doctors, nurses and technicians employed.

That’s not meant to be a put-down of Virginia’s hospitals. The ability to expertly handle highly complex medical cases does not tell us much about the ability to handle routine cases. It doesn’t tell us how much the hospitals charge for their services or whether they’re providing value for the dollar. It doesn’t mean that Virginia hospitals aren’t serving their community. What the numbers mean is that Virginia is missing out on an economic development opportunity to provide services outside the community.

What U.S. News & World-Report does not tell us, and I don’t know, is what it takes to become a national-class hospital. I suspect that it takes a long time to build a top oncology or heart program, so longevity is probably a requirement. It also helps to live in a community that can afford to pay the high salaries of top medical talent. And it probably helps to have wealthy philanthropists willing to endow new buildings, medical school professorships and R&D. Undoubtedly, there are other factors of which I am unaware. I think it would be interesting to know what the key drivers are, and whether building institutions known for their medical excellence is something that communities can influence through government policy and/or philanthropic endeavors.

Virginians still think of economic development either as big game hunting for corporate investments or venture capital-driven business creation. But economic development comes in many forms, and hospitals are one. It strikes me that this is an area that warrants more attention here in the Old Dominion.

Alpha Natural Resources: Running Wrong

Alpha miners in Southwest Virginia (Photo by Scott Elmquist)

Alpha miners in Southwest Virginia
(Photo by Scott Elmquist)

 By Peter Galuszka

Four years ago, coal titan Alpha Natural Resources, one of Virginia’s biggest political donors, was riding high.

It was spending $7.1 billion to buy Massey Energy, a renegade coal firm based in Richmond that had compiled an extraordinary record for safety and environmental violations and fines. Its management practices culminated in a huge mine blast on April 5, 2010 that killed 29 miners in West Virginia, according to three investigations.

Bristol-based Alpha, founded in 2002, had coveted Massey’s rich troves of metallurgical and steam coal as the industry was undergoing a boom phase. It would get about 1,400 Massey workers to add to its workforce of 6,600 but would have to retrain them in safety procedures through Alpha’s “Running Right” program.

Now, four years later, Alpha is in a fight for its life. Its stock – trading at a paltry 55 cents per share — has been delisted by the New York Stock Exchange. After months of layoffs, the firm is preparing for a bankruptcy filing. It is negotiating with its loan holders and senior bondholders to help restructure its debt.

Alpha is the victim of a severe downturn in the coal industry as cheap natural gas from hydraulic fracturing drilling has flooded the market and become a favorite of electric utilities. Alpha had banked on Masset’s huge reserves of met coal to sustain it, but global economic strife, especially in China, has dramatically cut demand for steel. Some claim there is a “War on Coal” in the form of tough new regulations, although others claim the real reason is that coal can’t face competition from other fuel sources.

Alpha’s big fall has big implications for Virginia in several arenas:

(1) Alpha is one of the largest political donors in the state, favoring Republicans. In recent years, it has spent $2,256,617 on GOP politicians and PACS, notably on such influential politicians and Jerry Kilgore and Tommy Norment, according to the Virginia Public Access Project. It also has spent $626,558 on Democrats.

In 2014-2015, it was the ninth largest donor in the state. Dominion was ahead among corporations, but Alpha beat out such top drawer bankrollers as Altria, Comcast and Verizon. The question now is whether a bankruptcy trustee will allow Alpha to continue its funding efforts.

(2) How will Alpha handle its pension and other benefits for its workers? If it goes bankrupt, it will be in the same company as Patriot Coal which is in bankruptcy for the second time in the past several years. Patriot was spun off by Peabody, the nation’s largest coal producer, which wanted to get out of the troubled Central Appalachian market to concentrate on more profitable coalfields in Wyoming’s Powder River Basin and the Midwest.

Critics say that Patriot was a shell firm set up by Peabody so it could skip out of paying health, pension and other benefits to the retired workers it used to employ. The United Mine Workers of America has criticized a Patriot plan to pay its top five executives $6.4 million as it reorganizes its finances.

(3) Coal firms that have large surface mines, as Alpha does, may not be able to meet the financial requirements to clean up the pits as required by law. Alpha has used mountaintop removal practices in the Appalachians in which hundreds of feet of mountains are ripped apart by explosives and huge drag lines to get at coal. They also have mines in Wyoming that also involve removing millions of tons of overburden.

Like many coal firms, Alpha has used “self-bonding” practices to guarantee mine reclamation. In this, the companies use their finances as insurance that they will clean up. If not, they must post cash. Wyoming has given Alpha until Aug. 24 to prove it has $411 million for reclamation.

(4) The health problems of coalfield residents continue unabated. According to a Newsweek report, Kentucky has more cancer rates than any other state. Tobacco smoking as a lot to do with it, but so does exposure to carcinogenic compounds that are released into the environment by mountaintop removal. This also affects people living in Virginia and West Virginia. In 2014, Alpha was fined $27.5 million by federal regulators for illegal discharges of toxic materials into hundreds of streams. It also must pay $200 million to clean up the streams.

The trials of coal companies mean bad news for Virginia and its sister states whose residents living near shut-down mines will still be at risk from them. As more go bust or bankrupt, the bill for their destructive practices will have to borne by someone else.

After digging out the Appalachians for about 150 years, the coal firms have never left coalfield residents well off. Despite its coal riches, Kentucky ranks 45th in the country for wealth. King Coal could have helped alleviate that earlier, but is in a much more difficult position to do much now. Everyday folks with be the ones paying for their legacy.

A Glimpse into the Byzantine World of Virginia Health Care

Murky

Murky

by James A. Bacon

To call the United States health care system Byzantine is to cast a slur upon the ancient empire of that name. A glimpse of the bizarre, Rube Goldberg-esque way in which the system functions in Virginia can be seen in today’s Richmond Times-Dispatch article about the state’s Certificate of Public Need (COPN) program.

A state working group is studying whether to scrap or modify the regulatory system, which requires hospitals and other health care providers to seek state approval for new or expanded medical-care facilities and the acquisition of expensive equipment. The system curtails competition by making it difficult for new enterprises to enter the marketplace, and it often ties regulatory approvals to promises to provide charity care.

In 2013, health care providers donated $1.34 billion worth of charity care to comply with the state-mandated obligations, the T-D quotes Peter Boswell, chief of Virginia’s Department of Health Office of Licensure and Certification, as saying. Statewide, 195 certificates of need are conditioned upon requirements of providers to administer free care. As an example of how that might work, the T-D says a cardiac catheterization lab might have a requirement to provide 3.8 percent charity care.

Don’t get me wrong. We need a mechanism for providing health care to poor people who fall between the cracks of government assistance, Obamacare and private insurance. This is just an insanely opaque way of going about it. That $1.34 billion is not subject to any form of market discipline or legislative review. State regulators cut deals with health care providers, and then it’s up to the providers to live up to their obligations. The state lacks the resources to audit compliance.

Assuming hospitals and other providers do comply, who ultimately pays? Do the $1.34 billion in payments come out of hospital profits? Or do hospitals simply pass on the cost by jacking up charges to paying customers? I doubt anyone really knows. If there’s one thing as opaque as the health care sector’s pricing system, it’s health care accounting.

Health care is an inherently complex business, involving trade-offs between price, quality, convenience and other factors that few consumers are equipped to make. That inherent complexity is compounded by layer upon layer of regulation, subsidy, cross-subsidy and other forms of complexity. I don’t see how it’s possible for anyone participating in the industry to make economically rational decisions. No wonder there is so much waste and inefficiency. No wonder costs are out of control. No wonder private health care insurance grows more unaffordable with each passing year. No wonder Congress felt compelled to enact health care “reform” (although the reform known as Obamacare makes the system even more bureaucratic, complex, opaque and uncompetitive).

Eliminating COPN in Virginia is not a silver bullet that will miraculously create a transparent, competitive market-based health care system. Other states have abolished COPN, and their systems are not notably lower cost or more efficient (that I know of). But it is one layer of anti-competitive complexity that Virginia legislators can strip out of the system, thereby making the state marginally less hostile to innovation and competition. Combined with other market-based reforms, it could make a difference.

If Virginia abolished COPN, what would happen to uninsured people who depend upon that $1.34 billion a year in uncompensated care? Aye, there’s the rub. Politically, it may be impossible to dismantle the program. Perhaps we are doomed to living (and dying) with an opaque, irrational and inefficient system.

Capitalism Triumphs Again!

RAM clinic, Pikesville Ky., June 2011. Photo by Scott Elmquist

RAM clinic, Pikesville Ky., June 2011.
Photo by Scott Elmquist

By Peter Galuszka

If there were any questions about just how capitalism has failed, one need look no farther than Wise County, where, this week, hundreds, if not thousands, of people will line up for free medical care.

The event is ably noted in The Washington Post this Sunday by a young opinion writer named Matt Skeens who lives in Coeburn in the coalfields of southwestern Virginia.

This week, the Remote Area Medical clinic will come to the Wise County fairgrounds to offer free medical and dental care to anyone who needs it.

You might ask yourself a question: why do so many people in one of the parts of the United States that is fantastically wealthy with natural resources need free medical care? Where is the magic of capitalism so often lauded on this blog?

A few insights from Mr. Skeens:

“Local representatives of Southwest Virginia will travel to the fairgrounds to stand on a coal bucket and assure us they’re fighting against President Obama and the ‘war on coal.’ These politicians won’t mention that with their votes to block Medicaid expansion, they ensured that the lines at RAM won’t be getting any shorter. But hating Obama in these parts is good politickin.”

Skeens runs through a list of mountain folk who can’t afford health care. One is a breast cancer survivor who hasn’t had a screenings in years. His grandfather, a retired electrician and coal miner, had also camped out at RAM clinics to get help.

Odd that this is the way I found neighboring West Virginia when I moved there with my family from suburban Washington, D.C. in 1962. Just as it was then, the riches that should have helped pay for local medical care went out of state. Much of the coal left by railcar or barge. Now, natural gas released by hydraulic fracking will find its way to fast-growing Southeastern cities or perhaps overseas thanks to new proposed pipelines such as a $5 billion project pitched in part by Dominion Resources.

While I have never been to the Wise County RAM clinic, I did happen to drop by one in Pikesville, Ky., a coalfield area that is one is Kentucky’s poorest county. It is not far from Wise. I was busy researching a book on Richmond-based Massey Energy, a renegade coal firm, in June 2011.

Photographer Scott Elmquist and I were on our way from Kentucky to an anti-strip mining rally in West Virginia when we noticed the RAM signs. More than 1,000 people had started lining up at the doors around 1:30 a.m. at the local high school.

It was packed inside. A Louisville dental school had sent more than 50 dental chairs that lined the basketball court. Some of the patients said they were caught in a bind: they had jobs but didn’t have enough health coverage and couldn’t pay for what they needed.

Since then, there’s been some good news. Unlike Virginia, whose legislature has stubbornly refused to expand Medicaid to 400,000 residents who need it (supposedly in a move to tighten federal spending), Kentucky expanded Medicaid last year. Now, 375,000 more people have health insurance.

Not so in Virginia. People continue to suffer while those with comfortable lives laud the miraculous benefits of capitalism.

A Landmark Day for the Rule of Law

Chief Justice John G. Roberts: "It depends on what the meaning of 'state' is."

Chief Justice John G. Roberts: “It depends on what the meaning of ‘state’ is.”

The United States Supreme Court has ruled that wording in the Affordable Care Act — that subsidies should be limited to health care exchanges “established by the State” — did not mean what it plainly said and that Congress “meant” for subsidies to be made available to federally established exchanges as well.

In a series of other dramatic rulings, the Supreme Supreme also ruled that the sky is green, one plus one equals three and the laws of physics are subject to judicial interpretation.

— JAB

Only Marginal Gains from Obamacare Insurance Overhaul

insurance_coverage_national

Percentage of adults 18-64 who lacked health insurance coverage, 1997-2004. Graphic credit: National Health Interview Survey

by James A. Bacon

After all the strum and drang over Obamacare, the restructuring of the United States health care system, the re-engineering of the medical insurance industry and dislocation to millions of Americans who discovered they could not necessarily keep their doctor or their health care plan, even if they liked it, it turns out that the piece of the program that made the biggest difference in increasing health coverage for the American people was Medicaid expansion. Take that away, and the number of Americans lacking health care coverage declined only slightly — and the reasons for that decline are not clear.

That’s not the spin put on the numbers you’ll read in the media. (See the Richmond Times-Dispatch spin here.) But it’s certainly a legitimate interpretation of the numbers reported by the 2014 National Health Interview Survey, which is not a libertarian think tank or funded by the evil Koch Brothers but a program of the National Center for Health Statistics.

The number of Americans under 65 years old covered by the infamous health care exchanges amounted to 6.7 million — or about 2.5% of that segment of the population. (Remember, that number includes Americans who previously had private insurance and found themselves bumped into an exchange.) That compares to 170 million, or 63.6%, who were covered by private health insurance plans, and 36 million (11.5%) of Americans without any kind of insurance, public or private.

A major driver behind the improved numbers was expansion of Medicaid. Among working-age adults in states that expanded Medicaid, states the report, the percentage with Medicaid coverage expanded from 17.7% in 2013 to 19.9% in 2014 — a gain of 2.2 percentage points, while comparable adults in states that did not expand Medicaid, like Virginia, saw no significant change in public coverage. Literally half the gains in the insurance-coverage rate could have been achieved by expanded Medicaid (in the states that chose to expand it) and scrapping the rest of Obamacare.

Here are the Virginia numbers for all ages:

Private health coverage — 67.0%
Public health coverage — 31.3%
Uninsured — 10.8%

Lost in the weeds is the bigger picture. Look at the chart of uninsured Americans at the top of the page. While the number of uninsured  dropped significantly between 2013 and 2014, the uninsured population had been shrinking since 2010 at the worst of the Great Recession. Significant gains in insurance coverage occurred simply as the result of increasing employment.

Now compare the 2014 numbers to the 1999 numbers — the number of uninsured is about the same. Anyone remember 1999? That was the tail end of the Clinton-era Internet boom. Unemployment was exceedingly low. The best way to ensure that Americans enjoy health care insurance is to ensure that they have a job. Not every job provides medical coverage but most do. The more employers find themselves competing for labor, the more likely they are to provide some level of medical insurance.

Instead of pursuing macro-economic reforms and institutional reforms that bolster productivity and sustainable economic growth, the United States got a one-shot stimulus plan, higher taxes, more regulation, Obamacare and sub-par economic growth. While Americans have made marginal gains in gaining access to health insurance, thanks to Obamacare, we’re also experiencing a consolidation of the hospital industry into a handful of cartel-like “health systems,” the conversion of physicians from independent providers into salaried minions of hospitals, and a consolidation of the health insurance industry. The health care industry is becoming stodgier, more bureaucratic, more risk averse, more prone to rent-seeking and less interested in innovation. For marginal gains in the percentage of the insured population, we will all be losers in the long run.

New Film Documents Horrors of Coal Mining

blood on the moutain posterBy Peter Galuszka

Several years in the making, “Blood on the Mountain” has finally premiered in New York City. The documentary examines the cycle of exploitation of people and environment by West Virginia’s coal industry highlighting Massey Energy, a coal firm that was based in Richmond.

The final cut of the film was released publicly May 26 at Anthology Film Archives as part of the “Workers Unite! Film Festival” funded in part by the Fund for Creative Communities, the Manhattan Community Arts Fund and the New York State Council of the Arts.

Directed by Mari-Lynn Evans and Jordan Freeman, the film shows that how for more than a century, coal companies and politicians kept coal workers laboring in unsafe conditions that killed thousands while ravaging the state’s mountain environment.

As Bruce Stanley, a lawyer from Mingo County, W.Va. who is interviewed in the film and has fought Donald L. Blankenship, the notorious former head of Massey Energy, says, there isn’t a “War on Coal,” it is a “war waged by coal on West Virginia.”

When hundreds of striking workers protested onerous and deadly working conditions in the early 1920s, they were met with machine guns and combat aircraft in a war that West Virginia officials kept out of history books. They didn’t teach it when I was in grade school there in the 1960s. I learned about the war in the 1990s.

The cycle of coal mine deaths,environmental disaster and regional poverty continues to this day. In 2010, safety cutbacks at a Massey Energy mine led to the deaths of 29 miners in the worst such disaster in 40 years. Mountains in Central Appalachia, including southwest Virginia, continue to be ravaged by extreme strip mining.

As Jeff Biggers said in a review of the movie in the Huffington Post:

“Thanks to its historical perspective, Blood on the Mountains keeps hope alive in the coalfields — and in the more defining mountains, the mountain state vs. the “extraction state” — and reminds viewers of the inspiring continuum of the extraordinary Blair Mountain miners’ uprising in 1921, the victory of Miners for Democracy leader Arnold Miller as the UMWA president in the 1970s, and today’s fearless campaigns against mountaintop-removal mining.”

The movie (here is the trailer) is a personal mission for me. In 2013, after my book “Thunder on the Mountain, Death at Massey and the Dirty Secrets Behind Big Coal,” was published by St. Martin’s Press, Mari-Lynn Evans called me and said she liked the book and wanted me to work with her on the movie project. She is from a small town in West Virginia a little south of where I spent several years as a child and thought some of my observations in the book rang true.

I drove out to Beckley, W.Va. for several hours of on-camera interviews. Over the next two years, I watched early versions, gave my criticisms and ideas and acted as a kind of consultant. Mari-Lynn’s production company is in Akron and I visited other production facilities in New York near the Brooklyn Navy Yard.

Interesting work if you can get it. My only forays into film making before had been with my high school film club where he videographed a coffin being lowered into a grave (in West Virginia no less). I was greatly impressed when I saw the movie at its New York premiere.

Mari-Lynn and Jordan have been filming in the region for years. They collaborated on “The Appalachians,” an award-winning three-part documentary that was aired on PBS a few years ago and on “Coal Country” which dealt with mountaintop removal strip mining.

They and writer Phyllis Geller spent months detailing how coal companies bought up land on the cheap from unwitting residents, hired miners and other workers while intimidating them and abusing them, divided communities and plundered some very beautiful mountains.

Upper Big Branch is just a continuation of the mine disasters that have killed thousands. The worst was Monongah in 1907 with a death toll of at least 362; Eccles in 1914 with 183 dead; and Farmington in 1968 with 78 dead (just a county over from where I used to live).

By 2008 while Blankenship was CEO of Massey, some 52 miners were killed. Then came Upper Big Branch with 29 dead in 2010.

At least 700 were killed by silicosis in the 1930s after Union Carbine dug a tunnel at Hawks Nest. Many were buried in unmarked graves.

While state regulation has been lame, scores West Virginia politicians have been found guilty of taking bribes, including ex-Gov. Arch Moore.

The movie is strong stuff. I’ll let you know where it will be available. A new and expanded paperback version of my book is available from West Virginia University Press.

Blankenship is scheduled to go on trial on federal charges related to Upper Big Branch on July 13.

Richmond Childrens Hospital Deal Collapses

Did VCU's commitment to  its new $168 million childrens' pavilion kill plans for a consolidated Richmond regional childrens' hospital?

Did VCU’s commitment to its new $168 million childrens’ pavilion kill plans for a consolidated Richmond regional childrens’ hospital?

by James A. Bacon

To be sure, building a new, free-standing childrens’ hospital for the Richmond region would be an expensive proposition — on the order of $600 million. But when mega-philanthropists Alice and William H. Goodwin are willing to kick in $150 million, a fund-raising campaign has been organized to raise another $100 million to $150 million, and dozens of pediatric physicians in the region are backing the project, one would think that community leaders could find a way to make it happen.

But all bets are off now that two key participants, Virginia Commonwealth University and Bon Secours Richmond Health System announced yesterday that they had pulled out of the deal. Goodwin, who with his wife has worked on the idea for eight years, said he would be willing to resume talks if the hospitals were, but otherwise, “I don’t need another couple of years of discussions.”

The collapse of the Childrens’ Hospital in the Richmond region stands in stark contrast to the announcement in Febuary by Inova Health Systems in Fairfax County that it would purchase the old Exxon-Mobil headquarters facility, assessed at $193 million in value, in order to house a world-class facility dedicated to genomics and personalized medicine.  The big difference is that Inova did not have to balance competing interests in the same way that promoters of the Richmond childrens’ facility do.

The argument in favor of consolidating patient care for children in a single state-of-the-art facility is that a specialized facility can provide superior care and better medical outcomes for children than a system that is fragmented between three major health systems, VCU, Bons Secours and HCA. (For-profit HCA was not a party to the childrens’ hospital negotiations.) It is a truism of medical economics that the greater the number of medical procedures performed by a medical practice and its physicians, the more efficient the operations, the lower the cost and the better the outcomes. Another advantage of a dedicated childrens’ facility is that combining pediatric practices would create a larger volume that could support more specialties, saving many patients and their families from traveling outside the region for their medical care.

Against those advantages is the hard business reality that neither VCU nor Bon Secours is willing to give up their significant pediatric practices out of the goodness of their hearts. Both health systems would lose major revenue streams during a time of great uncertainty caused by the legal challenge to Obamacare subsidies, the refusal of the General Assembly to expand Virginia’s Medicaid program and federal funding issues regarding the training of new physicians.

“This particular model that was proposed was a free-standing hospital with no ownership by VCU or Bon Secours,” said Tony R. Ardabell, CEO of Bon Secours Richmond, as quoted in the Richmond Times-Dispatch. “That would have been a tremendous negative impact to the bottom line, and we were worried about the sustainability of our ministry at St. Mary’s Hospital for the whole population of Richmond.”

“As a safety-net hospital we are headed into a very, very serious set of storms that are not totally predictable but you can see them out into the future being difficult periods,” said VCU President Michael Rao.

Goodwin’s reaction: Those are short-term problems. He is looking at a 50-year time horizon.

While the financial environment for the health care industry undoubtedly is cloudy, Bon Secours and VCU are staggeringly profitable. At least they were in 2013, according to data reported to Virginia Health Information; it is possible that the Obamacare roll-out and other factors have impacted profits negatively since then. Here is the data:

Note: The Bon Secours data is a composite of the four Bon Secours hospitals in the Richmond region; it is not clear from the VHI profiles if Bon Secours Richmond regional administrative overhead is included. Also note: The definition of "operating income" is profit before interest and taxes.

Note: The Bon Secours data is a composite of the four Bon Secours hospitals in the Richmond region; it is not clear from the VHI profiles if Bon Secours Richmond regional administrative overhead is included. Also note: The definition of “operating income” is profit before interest and taxes.

For all the benefits it would offer the community, a new children’s hospital would create problems for VCU and Bon Secours, which would stand to lose tens of millions, perhaps hundreds of millions, of dollars of pediatric business, saddling them with tremendous stranded costs in existing facilities, staff and equipment. The problem would be all the more acute for VCU, which is building a $168 million Children’s Pavilion on Broad Street to consolidate pediatrics services across the downtown campus.

But questions arise about the responsibility that these two not-for-profit enterprises have toward the public good. One could argue that the primary responsibility of VCU and Bon Secours should be to the health of the community, not their highly profitable bottom lines. If a consolidated, state-of-the-art childrens’ facility would provide superior health care to the region’s young people, the VCU and Bon Secours boards of directors have some serious soul searching to do.

Dave Brat’s Bizarre Statements

 By Peter Galuszka

Almost a year ago, Dave Brat, an obscure economics professor at Randolph- Macon College, made national headlines when he defeated Eric Cantor, the powerful House Majority Leader, in the 7th District Brat Republican primary.

Brat’s victory was regarded as a sensation since it showed how the GOP was splintered between Main Street traditionalists such as Cantor and radically conservative, Tea Party favorites such as Brat. His ascendance has fueled the polarization that has seized national politics and prevented much from being accomplished in Congress.

So, nearly a year later, what has Brat actually done? From reading headlines, not much, except for making a number of bizarre and often false statements.
A few examples:

  • When the House Education and Workforce Committee was working on reauthorizing a law that spends about $14 billion to teach low-income students, Brat said such funding may not be necessary because: “Socrates trained Plato in on a rock and the Plato trained Aristotle roughly speaking on a rock. So, huge funding is not necessary to achieve the greatest minds and the greatest intellects in history.”
  • Brat says that the Affordable Care Act (Obamacare) is a step towards making the country be more like North Korea. He compares North and South Korea this way:  “. . . it’s the same culture, it’s the same people, look at a map at night, half the, one of the countries is not lit, there’s no lights, and the bottom free-market country, all Koreans is lit up. See you make your bet on which country you want to be, right? You want to go to the free market.” One problem with his argument:  Free market South Korea has had a single payer, government-subsidized health care system for 40 years. The conservative blog, BearingDrift, called him out on that one.
  • Politifact, the journalism group that tests the veracity of politicians’ statements, has been very busy with Brat. They have rated as “false” or “mostly false” such statements that repealing Obamacare would save the nation more than $3 trillion and that President Obama has issued 468,500 pages of regulations in the Federal Register. In the former case, Brat’s team used an old government report that estimated mandatory federal spending provisions for the ACA. In the latter case, Politifact found that there were actually more pages issued than Brat said, but they were not all regulations. They included notices about agency meetings and public comment periods. What’s more, during a comparable period under former President George W. Bush, the Federal Register had 465,948 pages, Politifact found. There were some cases, however, where Politifact verified what Brat said.
  • Last fall, after Obama issued an executive order that would protect up to five million undocumented aliens from arrest and deportation, Brat vowed that “not one thin dime” of public money should go to support Obama’s plan. He vowed to defund U.S. Citizen and Immigration Services but then was told he couldn’t do so because the agency was self-funded by fees from immigration applications. He then said he would examine how it spent its money.

The odd thing about Brat is that he has a doctorate in economics and has been a professor. Why is he making such bizarre, misleading and downright false statements?