Recording of Sam Maizel’s Discussion of Distressed Hospitals

A noted expert in the restructuring of health care business debts, both in and out of court, Sam Maizel treated Seton Hall to a one hour crash course on the fiscal crisis encountered by many of America’s hospitals. The significant financial hurdles that the hospital industry is facing has made the bankruptcy process that many hospitals encounter one of the fastest growing fields in health law.

Mr. Maizel has represented the federal government as a trial attorney in the U.S. Department of Justice’s Commercial Litigation Branch. He also served in the JAG Corps in Operation Desert Shield and Desert Storm after serving in the 101^st Airborne Division and the 3^rd US Infantry Regiment. Mr. Maizel now practices in Los Angeles for  Pachulski Stang Ziehl & Jones LLP.

You can download Mr. Maizel’s talk here, or alternatively, you can stream it to your browser by clicking “Play” below:

Kaiser Health News, New Jersey Gets a New Hospital?, & Kicking Medicaid Grandma to the Curb

In the wake of declining newspaper presence, the Kaiser Family Foundation, a nonprofit private operating foundation known for its health care concerns, has started Kaiser Health News. In the present issue, there are two articles of special note for New Jerseyans. The one regards the plans of Hackensack University Medical Center, a 775-bed teaching and research hospital that is one of New Jersey’s most prestigious, [which] requested state permission to open a new hospital in Pascack Valley’s empty [hospital] buildings. Although Hackensack is a nonprofit, it announced that Westwood would be getting a for-profit facility financed by a private equity firm from Texas.

Not everyone approves.

The other regards measures that New Jersey legislators are considering in response to a recent investigation of assisted living facilities. KFN reports

Associated Press/Philadelphia Inquirer reports that “lawmakers this week will consider measures to enhance protections for assisted living residents in New Jersey to ensure they aren’t discharged simply because they pay with Medicaid.” The legislation comes in response to an investigation that found a Wisconsin-based assisted living firm called Assisted Living Concepts, which has eight facilities in New Jersey and more than 200 nationwide, “wrongly showed New Jersey residents the door once they exhausted their savings and were about to go on Medicaid, despite promises to allow them to stay.”

Both stories are worth reading.

Ringing in a New Year in Health Care, For Whom the Bell Tolls?

Jane Sarasohn Kahn of The Health Care Blog has offered up some interesting, if not dismal, prognostications for 2009. Although issuing the caveat that “there are too many uncertainties that preclude us from doing a straight-line forecast for 2009, especially in health and health care,” she offers some insights based upon the present macroeconomic backdrop. They are worth noting, and a few may be found here below.

She asks us to take heed of the following:

Keep in mind the Kaiser Family Foundation’s metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid. This was the math that worked in 2007-8. The metric will probably change in 2009 as Governors struggle to balance budgets while providing medical services, education, and safe streets to citizens. The National Governors Association, and the individual state heads, have all warned that Governors will inevitably cut services in 2009 and into 2010 if tax receipts continue to decline.

According the U.S. Bureau of Labor Statistics, in November of 2007 the unemployment rate was 4.7%. For November of 2008 it was 6.7%. Regardless of the metric, the consequent health insurance math is less than reassuring.

As noted by Professor Frank Pasquale on this blog last week, the “Governors’ struggle” has already commenced. The Washington Post having reported that regarding Medicaid

“Already, 19 states — including Maryland and Virginia — and the District of Columbia have lowered payments to hospitals and nursing homes, eliminated coverage for some treatments, and forced some recipients out of the insurance program completely.”

As such, this line of forecast may be a bit “straighter” than others. The cuts and further prospective cuts in state funding are, as Frank Pasquale noted, “one more sad example of the procyclical nature of federalism here–states have less tax revenue during recessions, when need is greatest. No one should be surprised if more and more of the jobless uninsured, denied even basic dental care due to such cuts, fall into a “death spiral” of unemployment, disfiguring ailments, and a tendency to be underemployed due to such ailments.”

Ms. Sarosahn Kahn also makes a very important point about medical infrastructure:

“Hospitals’ credit woes will continue to constrain providers’ operations. Reports from all of the major credit rating agencies, including Standard & Poors, Fitch, Best and Moody’s, have all negatively opined about the state of hospital finance for 2009. Fitch and Moody’s downgraded the nonprofit hospital sector to negative. The American Hospital Association’s survey in November 2008 found that 1 in 2 hospitals was considering or actually postponing capital expenditures. This would include renovations, increasing capacity, and other capital programs. The cost of borrowing money has made it nigh impossible to find hospital financing for improvements.”

This too would seem to qualify for “straight line” prognostication. Hospitals are closing, layoffs have ensued, and as we and A.P. noted earlier this week, industry consultants predict “More closings and mergers are on the way.”

The A.P further noted that

Hospitals, which employ 5 million people, are reporting that donations and investment returns are down, patient visits are flat and profitable diagnostic procedures and elective surgeries are declining as people with inadequate insurance delay care. But those patients are turning up later at ERs, seriously ill…
Ms. Kahn also points out that among the ill, prescriptions are not being filled.

Manhattan Research found that 40 million Americans didn’t fill prescriptions due to cost constraints by the fourth quarter of 2008. This number could increase in 2009, leading to worsening health outcomes. In particular, scripts for mental health conditions weren’t filled as frequently as Rx’s for other types of conditions.

All in all, the equation itself would seem to not require Daniel; if left unchecked, only the particulars of the miserable sum remain unknown.

There are a few bright spots in this analysis, however, Ms. Kahn points out that

“Clinical effectiveness is becoming part of the larger analysis for spending scarce resources. There’s no better time than a recession to bring this concept into play on a mass scale.
She’s right, when times are tough, people have a tendency to want specifics when they get the bill– and to know that what they paid for worked.”

And there is this larger point,

“Policymakers and influentials have come to understand that health is integrated into the larger macroeconomy. It is a welcome sign that those who will be at the helm of the new economy on Team Obama recognize the intimate relationship between health and the American economy. Peter Orszag, just out of the Congressional Budget Office and soon to lead the Office of Management and Budget, has spoken publicly about health care costs and the GDP over the past eighteen months. His sober and smart observations give me comfort insofar as he will be playing a key role in reshaping the broken U.S. Economy.”

As we ring in the New Year and begin to contemplate the inter-relatedness of the macro-economy and commence what may well be the “fall into a ‘death spiral’ of unemployment, disfiguring ailments, and a tendency to be underemployed due to such ailments,” it might be worth a moment to consider the often sudden and unexpected nature of both job loss and catastrophic illness– and John Donne.

The bell which John Donne refers to in his most famous quote is “the passing bell,” tolled by the Church for those who are dying. As Donne lay very ill in his bed and heard this bell being tolled, he wondered if he were, in fact, sicker than he thought. And that perhaps that bell was being rung for him personally. He came to realize, however, that whether that was the case or not was largely irrelevant because

“No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of thy friend’s or of thine own were. Any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee.“

Hospitals Face Losses, Some Close

The Associated Press reports that hospitals are beginning to buckle under the weight of “tight credit, higher borrowing costs, investment losses and a jump in patients - many recently unemployed or otherwise underinsured - not paying their bills.” In response, there have been “more hospital closings…as well as layoffs, other cost-cutting and scrapping or delaying building projects.”

Tha A.P notes that “In November, Moody’s Investors Service changed its 12- to 18-month outlook from ’stable’ to ‘negative’ for nonprofit and for-profit hospitals, citing ‘prospects of a protracted recession,’ bad debt and the credit crunch.”

The article also notes that “many cash-strapped states already have begun cutting payments for poor people covered by Medicaid.” Tim Goldfarb, CEO of Gainesville-based Shands Healthcare–which just announced that it would be closing a hospital–said that “Florida started cutting Medicaid reimbursements two years ago, when its economy started to slow,” and that “he fears another huge cut next year.” Mr. Golfarb also reported that “his system, Florida’s second-largest provider of charity care, this year has seen bad debt jump 20 percent from patients with no insurance.” Read full story here.