Why Should Delaware Care?
A new report found that health care costs in Delaware once again blew past projected increases, costing residents more than $10,000 a year. A state-appointed board responsible for lowering health care costs in Delaware is still trying to finalize how it will hold hospitals accountable, while a lawsuit of its very existence looms overhead.
For the third consecutive year, health care spending in Delaware far surpassed analysts’ recommendations – a finding that comes just as a state board created to hold hospitals accountable for rising health care costs struggles to find its footing.
Health care spending in Delaware increased 9.1% between 2022 and 2023 to nearly $11 billion, according to an annual assessment released by the Delaware Department of Health & Social Services this month.
The increase is nearly three times what the state recommended as its benchmark rate of 3.1%.
On a per-capita basis, Delawareans spent $10,588 on health care in 2023 – or about an eighth of the median gross household income for the state.
Leading the way in those rising costs were hospital inpatient services and prescription drug benefits after rebates, each totaling about $2 billion, while hospital outpatient services ranked third at about $1.7 billion.
In a statement, DHSS Secretary Josette Manning said “a billion dollar increase in total health care expenditures in just one calendar year is significant, concerning, and unsustainable, especially in a time when states can no longer rely on federal health care funding.”
But the primary body appointed to study and reduce costs, the Diamond State Hospital Cost Review Board, has launched this year to a rocky start. Soon after its creation, one of the state’s largest hospital systems sued the state challenging the board’s existence.
Meyer questions board appointments
Formed last year when former Gov. John Carney signed House Bill 350 into law, the review board is tasked with reducing hospital costs in Delaware at a time when the state ranks among the highest in the nation.
The board faces an added wrinkle with Delaware’s new governor, who has ties to the state’s most influential hospital system and has shown less enthusiasm about the board than his predecessor. Soon after his inauguration, Gov. Matt Meyer appointed two longtime ChristianaCare executives to the board after Carney appointed five of the seven voting members on his way out of office.
Delaware First Lady and longtime ChristianaCare emergency room doctor Lauren Cooksey Meyer also holds a position of power within the hospital.
Last week, she was named a permanent department chair and physician executive for the hospital’s Emergency Medicine Service Line, according to a press release. She previously held the position on an interim basis since last year.
ChristianaCare is one of the state’s largest hospitals and employers, employing 13,784 employees in 2023, according to its website.
Asked if Meyer supports the mission of the cost review board, spokeswoman Mila Myles said in a statement that the governor is “committed to the success of the board,” but wants to make sure it “does not put the high quality of care provided by Delaware hospitals at risk.”
She also said Meyer does not believe that the cost review board alone will “fully address the rising costs of health care in Delaware.”
In the statement, she questioned the qualifications of review board members who Carney nominated in December.
“Your time would be better spent figuring out why none of the other board members have a background in health care and were rushed through during a special session at the end of the last administration’s term, all while facing a legal challenge,” Myles said in the statement.
Board seeks to establish process
Tuesday’s meeting came at a time when the board is wrestling with the ways in which it can drive down hospital costs in Delaware. As the name suggests, the Hospital Cost Review Board is tasked with managing hospital budgets, and could even veto hospital spending decisions that push price increases onto patients.
Yet in the few review board meetings to date, members have primarily quibbled over the types of financial information it would request from hospitals and when hospitals would be expected to submit them.
Members of the ChristianaCare wing of the board say making that financial information public without the proper “context” would not paint a complete picture of hospital spending.
In addition to ChrisitanaCare’s outsized presence on the board, the hospital is also suing the state over its very existence, calling the board “draconian” in legal filings. The lawsuit, which the hospital filed last year, claims the cost review board strips hospital directors of their power to operate free from government intrusion.
The state filed a motion to dismiss the lawsuit which is pending in Delaware’s Court of Chancery.
At Tuesday’s meeting, review board members discussed the recent health care benchmark spending report.
In 2018, Carney created the health care benchmark through the signing of two executive orders. One of the orders also formed a subcommittee on the Delaware Economic and Financial Advisory Council responsible to study that spending and recommend a manageable level of increases.
In 2022, state legislators passed a bill that Carney later signed codifying many of the initiatives created by the executive order. Delaware is one of eight states with a state-mandated benchmark meant to stem health care prices, including neighbors Maryland and New Jersey.
During a presentation on the report, Brian Frazee, the president of the Delaware Healthcare Association and a non-voting member of the review board, said that Delaware is one of the only states that places all of its accountability on hospitals.
Frazee, who represents the interests of the state’s hospital systems, spent much of the discussion on Tuesday placing the blame on other parts of the health care industry. During the meeting, he pointed to increases on pharmaceutical-related spending in the state, which accounted for nearly 30% of the increase between 2022 and 2023.
“We’re only one piece of the continuum,” Frazee said in reference to the state’s hospitals. “Yes, we’re a big piece, but we’re not the only piece.”
He also pointed to a recent ranking from U.S. News & World Report that named Delaware the first in the nation for hospital quality as evidence that the current system was working for patients.
Following discussions about the benchmark report, board members pivoted to a discussion about their internal regulations for what financial documents will be expected of hospitals, and when they’d be expected to submit them to the board on an annual basis.
The discussion mirrors similar conversations the board had at its two meetings prior to Tuesday, which normally led to members of the hospital-aligned wing of the board questioning the feasibility of requests.
Rick Geisenberger, the chair of the board and the former Finance Secretary under Gov. Carney, posed a question about when hospitals would submit their budgets to the board. Geisenberger argued hospitals should submit them “some significant time” before the end of their fiscal years – a notion that members aligned with the hospitals pushed back on.
“I do think that if you’re literally going to modify a budget, you have to have that budget well before the end of the fiscal year,” he said.