It is well understood that healthcare systems in the United States are navigating an ever-challenging operating environment. In the wake of the COVID-19 pandemic, increased costs, tightening labor markets and lagging reimbursement rates — all have contributed to significant financial stresses on the national healthcare system. In Delaware, like many other states, between Medicaid and the state’s insurance plan, as recently noted by the Delaware Governor, it faces ever-increasing healthcare costs.

To address the dilemma, some Delaware legislators have introduced into the Delaware General Assembly legislation that would establish a “Diamond State Hospital Cost Review Board”. This Review Board would require Delaware hospitals to submit a proposed budget to the board for approval. The Board would consist of five members — three appointed by the governor, one member appointed by the speaker of the Delaware House of Representatives and one member appointed by the president pro tempore of the Senate. The hospitals would be required to submit a budget for the upcoming year detailing expenditures and revenues, wage and salary data, assets, liabilities and scope of services. It would also require inpatient services, outpatient services, auxiliary services, utilization information and new hospital services and programs proposed for the coming year. A hospital’s violation of standards created by the review board could be subject to enforcement procedures including the potential of a civil penalty of up to $500,000. These standards appear to include (for now) a requirement to provide information related to the budget review process. The Diamond State Hospital Review Board would be a public body subject to “open meeting” law requirements analogous (for transparency purposes) perhaps to open meeting law requirements of state and municipal boards.

The original legislation was viewed by the Delaware Healthcare Association as of “deep concern.” This legislation has now been modified. Apparently, some of the more egregious provisions have been removed. However, one can observe from the association’s most recent public statements that it is still not happy, and appropriately so.

The creation of a Diamond Review Board is not a ‘gem’. While the recent bankruptcy filing of Steward Health Care System, LLC. and its many hospitals, have appropriately raised alarms as to the oversight necessary for hospital and provider systems, the creation of politically appointed board with the potential to modify and approve hospital budgets, seems to skirt significant areas where oversight may well be warranted. In Massachusetts where a number of the Steward hospitals operate, the hospital owners, according to the Massachusetts Attorney General, extracted value from the hospitals for among other reasons to pay substantial dividends to investors and expand their network in other states. The Mass. AG has said that over-leveraging hospitals and imposing exorbitant and unsustainable rental obligations created an untenable situation.

The Delaware legislation seems a blunt and unnecessary over-reach of governmental authority. Establishing a new bureaucracy when (as one Delaware legislator has suggested) Delaware isn’t really managing its own healthcare plans), seems likely to be creating new problems. Maybe, a frank discussion about permitting certain hospital mergers and their impact on the communities, like what could have taken place in the Steward situation, increasing reimbursement rates and other financial solutions could be getting closer to solving the financial problems.

This article is reprinted with permission of DOTmed HealthCare Business News and can be read online in its original format at: