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Reforming Health Care and Reducing Costs

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As I write this, the status of major the health care reform passing the General Assembly is in doubt. It seems that the heavy-handed lobbying of the hospitals might keep costs high and competition at bay. The hospitals actually sponsored a television and radio ad that so distorted the facts that it had to take them off the air. But the distortions continue.
The House passed major reform of the current anti-competitive Certificate of Public Need law and the effort is now in the State Senate.

The Virginia Hospital and Healthcare Association (VHHA) maintains that the hospitals need this anti-free market law because they are is such tenuous financial shape that competition could take them under, cost jobs, ruin local health care providers.

It is important to know this simple fact: The Hospital industry overall is not in financial trouble.

According to their own published financial numbers, the industry in Virginia had 10.7% year- over-year profit from 2013 to 2014. And on top of that, it had another 8.6% year-over-year profit from 2014 to 2015. See our studies on this topic on our website: or go directly to the Virginia Health Information website:

Fourteen states do not have COPN laws and the hospitals in those states are open for business, they are financially strong as are those in Virginia, and charity care is available. None of the consequences that the hospitals maintain will befall us here in Virginia have taken place. Yet the falsehoods and distortions continue.

When the Pennsylvania legislature considered re-imposing COPN laws last year – after almost 20 years of not having them – it was the Pennsylvania Hospital Association and the state doctors’ association that spoke out against the Certificate of Need laws. They understand that their industry is better off without such non-competitive restrictions.

Of the 36 remaining COPN states, Virginia has one of the largest numbers of areas controlled – 18, while Arizona (a large, growing and diverse state) has only 2-3 areas covered by a similar law.

A major study by the Mercatus Center at George Mason University shows that medical costs are higher in COPN states than in non-COPN states. Yet the proponents of continuing these outdated laws want us to believe otherwise.

When Mary Mannix, the CEO of Augusta Hospital, testified in the House against reforming the COPN laws, she said that Augusta was facing financially difficult times. Let’s look at the facts from its own financial filings:

Profits and net worth over the past three years for Augusta Hospital:
Profits                                        Net Worth
2013: $64,470,310                      $363,281,870.
2014: $54,936,259                      $428,419,353.
2015: $74,587,794                      $453,099,765.
Even though, Augusta saw less profit in 2014 than in 2013, its net worth increased by $65,140,150 or 18%. And its profit increased by close to $20 million between 2014 and 2015 and its net worth continued to increase by another $26,492,808.

And in the Northwest Region, where Augusta is located in the financial filings on the Virginia Health Information website, the acute hospitals – those like Augusta – showed an increase in their profits of $100 million from 2014 to 2015 (from $238,895,749 to $338,749,331) – fully a 50% increase! – and the total net worth of these acute hospitals increased by more than $290 million during this same time period – or 10.9%. This does not show financial trouble.

Finally, it is interesting that Ms. Mannix’s salary and benefits for 2013, in the latest IRS 990 filings, was $745, 939. Not bad for a “struggling hospital” in the Shenandoah Valley that wants to keep the current non-competitive COPN law in place!

For the hospital association in our state to publicly complain about its industry’s troubling financial situation makes one scratch his/her head in wonderment.

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