New Public Hospital Commissioner questions need for district: Is anyone noticing?

Approximately half of Washington State's 98 hospitals are within public hospital districts. Most of the rest are run on a not-for-profit basis. This represents a healthcare market that could be quite profitable for private healthcare businesses. I believe that our state's public hospital districts are in danger of being opened up to private interests and that a campaign to dissolve at least one of these districts, perhaps conceived as a start to dissolving all of them, is on its way in my district, Public Hospital District 1, the oldest in the state.

In researching an article I wrote in October, Challengers offer improved oversight, I don't know how I missed at least two major articles (1, 2) in the Seattle Times documenting that Anthony Hemstad, one of the people running for the board of PHD 1, had for over a year been engaged in an effort to reduce the size of the district in order to serve the interests of his city. One of the people mentioned along with Hemstad in these articles was activist Chris Clifford, who was quoted in a June, 2006 Seattle Times article (2) as advocating that the district be 'killed' like a dinosaur. Senator Pam Roach, also quoted in these articles, questioned the need for public health districts in urban areas and stated an intention to sponsor legislation to make it easier to reduce the size of the districts. She did so last session, with SB 5818. There is a companion bill in the House, cosponsored by my Democratic Representative, Pat Sullivan, among others.

I see no Seattle Times or PI articles run during Hemstad's campaign that connected all these dots, although after the election reporter Karen Johnson did run this article: Need for hospital district questioned. Today, two Seattle Times articles report critically on actions of the outgoing board without mentioning the possible conflict of interest of the new commissioner: Valley Medical Center's ethics policy could limit criticism, and Valley Board Catches Bad Code.

This second article is a guest column by Auburn Mayor Pete Lewis, Senator Cheryl Pflug, and Representative Christopher Hurst. It turns out that the outgoing hospital board in its final meeting passed a contract extension for its embattled chief administrator as well as an ethics policy that places some very questionable limitations on investigations into the hospital operations. Files of these two documents were provided to me earlier by Mr. Hemstad: Valley Medical Center Code of Ethics, and Roodman Contract Extension. Lewis, Hurst, and Pflug rightly, I think, cite those documents as evidence that the hospital board members may not have been serving the interests of the public hospital district. But they and the Seattle Times reporter leave it up to the reader to discover from past articles that there is, with an incoming commissioner, what many would consider to be an even greater public interest issue.

I'm puzzled by own my failure to find those key Seattle Times articles when I did my previous research. I did do quite a bit of reading in preparation for writing that article. I'm puzzled by the failure of the Seattle Times to report on this threat to our public hospital district. And I'm puzzled that Commissioners Carole Anderson and Gary Kohlwes, in their campaigns to hold on to their commission seats late last year, didn't notify the public of this threat to the district. If they had, Carole Anderson would almost certainly have held onto her seat, which she lost by a razor-thin margin to Anthony Hemstad.

As Maple Valley's City Manager, new Commissioner Hemstad courted other healthcare investment into the Public Hospital District area
Anthony Hemstad is City Manager for Maple Valley. Parts of that city are within PHD 1, and other land within the city was targetted by PHD 1 for annexation in 2006.

In May, 2006, PHD 1 residents voted on a ballot measure whether to approve that annexation bid. I live in that hospital district and noticed the intense negative coverage of the annexation proposal by the conservative King County Journal. The ballot measure failed by an unprecedented margin: 94% voted against it.

On May 11, shortly before the annexation vote, Seattle Times reporter Sonia Krishnan quoted Anthony Hemstad as opposing the annexation. He also noted: "There are enough facilities that want to open here that are not asking for public subsidies."

On May 27, 2006, shortly after the annexation proposal failed,  Hemstad was quoted by the same reporter as saying said the city would be talking within the next two weeks with four other hospital providers -- which ones in particular he wasn't at liberty to disclose  -- about bringing more services to the region.  "We had been looking to bolster health care in Maple Valley before the vote and we're still looking to do so," Hemstad said. "This is a very good market for a hospital to invest in. We're extremely confident we'll be making some announcements soon."

On June 8th, the same reporter quoted Hemstad as mulling over the difficulty of deannexation.

On 12/16/07, shortly after Anthony Hemstad was elected to the board of PHD1, he was quoted in the Seattle Times (3) as stating that it's hard to see any benefits for a public hospital district in an urban area.

Clifford and Senator Roach both backed the election of Anthony Hemstad to the board of PHD1.
In fact, it was the Washington Taxpayers Association PAC, associated with Senator Roach, that brought a $14,000 campaign donation into Hemstad's campaign late in the game to match large donations to the campaign of Carole Anderson, whom Hemstad was challenging. It is also worth noting that the historically large Public Disclosure Commission fine was levied against Valley Medical Center right before the election, almost certainly resulting in votes needed to push Hemstad's candidacy to a win, was the final outcome of a complaint originally filed by Maple Valley's Mayor, Laure Iddings.

PHD 1: A well-run hospital
The administration of PHD 1 has made some spectacular mistakes in recent years. However, I think I owe it to readers to note that I have heard from a number of sources that the hospital is regarded as, generally, very well run. As far as "scorecard" criteria like employee satisfaction, patient satisfaction, financial stability, health outcomes, and range of services available, the hospital is reported to be doing very well. No, it's not perfect and public oversight has not held it fully to account. Anthony Hemstad noted to me that its recent, very expensive, expansion of its emergency room facilities was an investment in the most expensive kind of medical care and that he believes we should be focusing more on prevention.  I agree with him. Certainly, there are many criticisms that can be made of Valley Medical. But the hospital is not so badly run that the entire model needs scrapping.

Is it right to run for election to an agency you may want to dissolve without notifying voters that this is your intention?
In our communications prior to the election, I asked Anthony Hemstad about his plans as commissioner. He didn't mention that he questioned the need for the hospital district's existence, nor that he would consider structural changes once he was elected. I did not see that concept on his campaign website or in the two campaign flyers I received by mail. Had he disclosed this important information, my vote would have been different. If PHD 1 is dissolved, Maple Valley will achieve its goal of no longer being part of the district and will be in a better position to invite in private healthcare investment. These are outcomes that can be said, arguably, to serve Maple Valley's interests. I don't believe they are outcomes that would serve the interests of the public hospital district that Mr. Hemstad has just been elected to.

Different hospital models: public, private, and non-profit: Does it matter which one?
As I understand it, there are three common models for hospital funding: public, private, and non-profit. Washington state has very few private hospitals.  According to the Washington Association of Public Hospital Districts, nearly half of Washington's 98 hospitals are part of a public hospital district.  Most of the others are run as nonprofit organizations. Does it matter what we have here? Is a non-profit hospital as good as a hospital within a public hospital district, for example?

In a phone conversation with me earlier this month, Hemstad corrected an impression that he was calling for privatization of Valley Medical Center. He said that he believes in the non-profit model for hospitals and doesn't see the private market as offering all the answers for health care. He did not dispute that he questions whether we need Valley Medical Center to continue to be run as a public hospital district.

If we PHD 1 is replaced by a non-profit hospital, will that make any difference to consumers?

In answering that question I think it is important to note that it is likely that, with the dissolution of PHD 1, we will discover that commercial healthcare companies are lined up to move into the area much more quickly than a nonprofit public hospital will be able to be organized. That would be an outcome tantamount to privatizing the district. Even if by some miracle the hospital was converted to a private non-profit, that model would still take away from the public the right to oversight of how the hospital is governed, what capital project are built, and so on.

Healthcare ain't free
And it is also important to note that, under all three models, public, private, and non-profit, taxpayers AKA consumers, pay for their healthcare. This stuff doesn't come free and it's not donated. Turn a public hospital district into a non-profit or private one, and our public subsidy will merely shift from being paid through property taxes to, almost certainly, higher costs that are paid in other ways.

Healthcare is not free and, ultimately, the consumer pays. When private industry takes its cut of the profits of our healthcare, we pay more because we are, ultimately, paying for those profits, as well. Medicare and Medicaid, insurance for public employees, subsidized technology development, and subsidized capital improvements all are paid for with federal tax dollars. Switching from a public hospital district to private care will simply remove public oversight from the services we pay for and cost us more.

If we think that it is unlikely we'll lose our public hospital districts, we should think again. Here, for example, is a recent report of a California district which is being privatized right now: Group questions hospital deal.

A long history of private industry fighting the right of consumers to control their public healthcare
Recently, my son and I were waiting for a doctor's appointment at the Group Health Clinic in Kent and I noticed on one of the tables a copy of Walt Crowley's book, To Serve the Greatest Number: A History of Group Health Cooperative of Puget Sound. Group Health Cooperative was established about the same time, 1945-1947, as Public Hospital District 1. Both victories for consumer-controlled healthcare were part of the progressive movement at the time that recognized that healthcare costs are lowered when the public controls healthcare provision.

As I sat in the waiting room, reading Crowley's book and thinking about the privatization threat to our PHD 1, this quote from Dr. Michael Shadid, who founded the first group health cooperative in the country and helped to found ours: "private ownership of hospitals is wrong and detrimental to the interests of mankind, physically, morally, and financially." A few minutes later, looking up from the book, I saw walking in through the door of the clinic a woman I had met for the first time at the Anthony Hemstad's campaign victory party.

I wrote Mr. Hemstad with an account of that experience and followed it up with an attempt to pull at his heartstrings by saying that perhaps it was a sign! to meet someone from his victory party just as I was reading about the evils of private hospitals from the era when PHD 1 was established. Please, I asked him, look into the proposals for healthcare insurance being developed right now by Senator Karen Keiser, State Insurance Commissioner Mike Kriedler and others.  Please don't privatize our hospital. The health of our bodies should not be "marketized", I wrote. (I think what I meant there was commodified.)

Mr. Hemstad, who has been very responsive to my emails so far didn't answer that one and I don't blame him as it was perhaps a bit, well, unconventional. I hope he heard it the message behind it, however, that his constituents are counting on him to represent our best interests.

Advocates for dissolving urban public health districts maintain they are no longer needed because we have evolved past our urban roots. But Group Health Cooperative was not established because people lived in a rural area. It was founded because farmers and workers were (quote from Crowley's book) "fed up with the scant supply and high cost of health care for working people. That same need informed the formation of the public hospital districts, which came into being at the same time. Both consumer-led endeavors were robustly opposed by private, for-profit healthcare.

Unions and the Grange teamed up to establish the Group Health Cooperative so that healthcare would be affordable to them. Because it was their health at stake and their money, and because they had to plan ahead for costs, the cooperative practiced conservative medicine: high on prevention and low on the kinds of unnecessary interventions and medications that private industry relies upon to raise costs and profits. This model and the public hospital district model, together, influenced the evolution of healthcare in this region and has served us well.  Collaboration between Group Health and university, public, and non-profit hospitals, puttting the lessons learned in the provision of cooperative and public health provision into operation in non-profit organizations. This has helped our region keep health costs lower than the national average.

If PHD 1 has faltered, it has faltered because voters and health consumers in this area have taken their eye off the ball and because some of the people who we entrusted the administration of the district made mistakes. That is no reason for private interests to be able to step in and take control of our healthcare away from the community.

1. Election shocker: "No" vote hits 94% ; Measure proposed by Valley Medical | Voters firmly deny annexation; [Fourth Edition] Sonia Krishnan. Seattle Times. Seattle, Wash.: May 27, 2006. pg. B.1
2. At least 3 cities want out of Valley Medical district ; Need for districts being questioned | Black Diamond, Maple Valley and Bellevue ask to leave; [Fourth Edition] Sonia Krishnan. Seattle Times. Seattle, Wash.: Jun 8, 2006. pg. B.4
3. Need for Hospital District Questioned, Karen Johnson, Seattle Times,
   12/16/07