‘Draconian’: Delaware’s largest hospital system sues over creation of hospital cost review board

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This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Delaware’s largest hospital system has filed a lawsuit challenging the constitutionality of a new hospital budget review board.

ChristianaCare is suing the state of Delaware in Chancery Court, alleging the law violates its rights under both the Delaware and U.S. Constitution. The Diamond State Hospital Cost Review Board was signed into law in June. The legislation attempts to control health care expenses by requiring hospitals to submit annual budgets, audited financial statements and other financial data to the board for review.

Under the law, if a hospital doesn’t meet the state’s benchmark for controlling increases in hospital costs, the board will work with that entity to meet that benchmark going forward. If the hospital still doesn’t meet the target — or if the two can’t agree on an improvement plan — the review board can take control of the hospital’s future budgets, requiring it to seek the board’s approval on its financial plans.

Other states have their own version of hospital cost review boards. Delaware’s is based on Vermont’s Green Mountain Care Board, which has reviewed the state’s hospital budgets since fiscal year 2013.

In the lawsuit, which seeks to declare the law invalid and permanently stop it from taking effect, ChristianaCare calls the board “a state takeover … of the boards of certain private hospitals, including ChristianaCare, through the creation of a politically appointed, unelected, and unaccountable ‘Super-Board.’”

“The General Assembly rushed its approval of HB 350 and its draconian and unconstitutional measures, without any meaningful investigation concerning their expected effects, which will undoubtedly have a negative impact on patient care in Delaware,” the lawsuit states.

The legal filing also argues the creation of the hospital cost review board includes unlawful and discriminatory price caps for hospital services and forces them to disclose proprietary information.

A spokesperson denied an interview request to speak with a representative of the health system.

Senate Majority Leader Bryan Townsend, who was the Senate sponsor of the bill, said ChristianaCare fought attempts to improve transparency and improvements to health care delivery and access throughout the legislative process.

“Delawareans are paying tremendous amounts of health care and not getting good results for it and Christiana Care is at the forefront of the problem,” he said. “All kinds of very fair government policies apparently shouldn’t apply to it because it would somehow infringe on ChristianaCare’s ability to continue to do what it does, which to be very clear is to generate tremendous revenues for ChristianaCare at the expense of Delawareans.”

House and Senate Republicans cheered the health care system’s lawsuit, with House GOP members calling the legislation an “authoritarian overreach” in a statement Monday.

“Its supporters believe that government appointees are more capable of making hospitals’ spending decisions than the men and women who have spent their careers working in the healthcare sector,” the statement said. “This poorly conceived law is symptomatic of the bad policymaking that occurs when a single party controls the lawmaking apparatus.”

The lawsuit also contends that the law impacts Delaware corporate law and should have been passed with a two-thirds vote. The legislation passed both chambers with a simple majority.