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The Berger Commission Proposes Big Changes for New York Hospitals

New York State has too many hospital beds. This excess capacity leads to inefficiency, unnecessary health care spending, and unproductive competition for profitable services between neighboring hospitals. However, no legislator wants to be held responsible for closing or downsizing a hospital in his or her district, particularly where (as is often the case) the hospital is a major employer in the area. In response to this dilemma, the New York legislature enacted a creative solution: entrust the problems to a commission, whose recommendations must be either accepted or rejected as a whole.

That body, the Commission on Health Care Facilities in the 21st Century (aka, the Berger Commission) has now issued its final report, “A Plan to Stabilize and Strengthen New York’s Health Care System.” If the report is adopted, the State’s hospitals and nursing homes face a dramatic shake up. The report recommends closing nine hospitals and either merging, eliminating beds, or changing the services of another 48 others.

The legislature must accept or reject the plan in its entirety. The plan has the support of outgoing Governor George Pataki and Governor-elect Eliot Spitzer, and two powerful parties– the Greater New York Hospital Association and S.E.I.U. Local 1199– have decided not to oppose the plan. Accordingly, its implementation seems likely.

The closing and merger of hospitals is not unique to New York, but the planned heavy-handed restructuring and regulation are unusual. Unlike closures and mergers driven by market forces, these closings and mergers – called “rightsizing” by the commission – are the result of considerable study and debate designed to address specific economic failures in the provision of health services. If implemented, the plan will affect the economic viability of institutions, competition between hospitals, access to health care, and the ability of institutions to maintain cultural practices specific to religious, secular, unionized, and nonunionized hospitals. The extent to which the changes will have positive or negative fallout on consumers of health care is the subject of heated debate.

Economic Implications
It is not clear that the commission’s economic estimates are realistic. In testimony to the State Senate’s Health Committee, the Healthcare Association of New York State, a leading trade association for New York hospitals, argued forcefully that the commission has considerably underestimated the direct costs of its recommendations to the industry. In addition, it is not clear that the commission has adequately considered the direct and indirect economic effects on the communities in which the targeted institutions are located. Finally, the commission did not and could not address the underlying issues: continued health care inflation, the aging state population, and the pressure on the state and county budgets of soaring Medicaid costs.

Access issues
The plan’s call for the closure of nine hospitals may have less effect on access to care than its call for the merger and restructuring of 48 others. While the planned closings will undoubtedly be poorly received by consumers who are loyal to a hospital on the hit list, the hospitals targeted for closing are not, as is often the case when market forces control, the only available facilities in poor districts. Rather, the hospitals that will close are small, losing money, and located in areas where other hospitals can take their patients. Several are located in suburban areas. One, Niskayuna’s Bellevue Women’s hospital, provides boutique services to middle and upper-class populations, thereby siphoning lucrative procedures and paying customers from nearby urban hospitals. Consumers affected by the closings may have to change their place of service, but they should have continued access to care at the remaining institutions, which would absorb the closing hospitals’ patient load.

The proposed mergers and restructurings create more difficult access issues. The most troubling may be limitations on reproductive health services for women caused by mergers of Catholic and secular institutions. The required merger of Kingston and Benedictine Hospitals is “contingent upon Kingston Hospital continuing to provide reproductive services in a location proximate to the hospital,” but no such protection exists with respect to other mergers. For example, the plan calls for the merger of Schenectady’s Catholic St. Clare’s Hospital with the secular Ellis Hospital. St. Clare’s does not provide access to birth control, abortion, tubal ligation, and other practices deemed morally offensive by the Catholic Church, but Ellis does. The report does not say whether the merged entity will continue to provide reproductive health services.

The possibility that no hospital will provide reproductive health services in the Schenectady area is troubling and real. In the 127 mergers between Catholic and non-Catholic hospitals between 1990 and 1998, nearly half led to the elimination of reproductive health services.

The total elimination of reproductive services may not happen, however. The Ethical and Religious Directives for Catholic Health Care Services issued by the National Conference of Bishops allow a Catholic hospital to merge with a secular hospital that provides a full range of reproductive health services, as long as the Catholic hospital limits its direct involvement with the services deemed morally objectionable. New York Catholic and non-Catholic hospitals have eliminated reproductive services when they have merged, but some merged institutions outside New York have adopted creative compromises, such as creating a separate entity to allow women some access to reproductive services. For example, a medical center in Tennessee, jointly owned by Catholic and secular institutions, provides sterilizations in a women’s pavilion, which is separated by its own sign, logo, and private driveway. Of course, the physical separation of women’s health services from the main hospital grounds does not adequately address access issues: separation is inconvenient, expensive, and may be risky to the extent that the adjunct facility is unable to provide assistance for health emergencies. But separate facilities are better than no facilities, and Ellis and St. Clare’s should explore this possibility.

Cultural Clashes
Implementation of the plan will create cultural clashes that are not easy to resolve. Cultural clashes run deeper than differences on reproductive health. As Albany Bishop Howard Hubbard has noted, “Religiously-sponsored hospitals and nursing homes provide a unique and distinctively different approach for and delivery of health care services, especially in ministering to the spiritual component of illness and recovery.” The commission, in recommending the merger of religious and non religious institutions, does not address the spiritual components of care. The Catholic Conference may well litigate its claim to provide health care services in a way that accords with Catholic teachings. The Church claims a first amendment right to direct its ministry in accordance with its principles, and a need to prevent confusion about Catholic moral teaching against artificial reproduction, vasectomies, condoms, abortion, and other reproductive technology. Its religious freedom claim will be tested against the state’s strong interest in maintaining the fiscally sound provision of health services.

Other important cultural clashes will arise from the merger of unionized and nonunionized work forces and governmental and private hospitals. Unionized workers are protected by collective bargaining agreements. Work rules, insurance, time off, management structures, and disciplinary provisions differ dramatically depending on the application of a collective bargaining agreement. The commission’s plan offers no guidance as to how the expectations of the two sets of workers should be worked out in the mergers.

Cultural clashes between institutions generate litigation and raises ethical issues, which could derail efforts to merge institutions, as has happened in the past. Further and careful attention to the reconciliation of culturally different institutions is necessary if the plan is to succeed.

Compromises Ahead
The planned changes for New York’s hospitals may be a necessary first step toward ensuring their solvency. To the extent that the plan will increase efficiency and reduce waste without disproportionately harming underserved and minority communities, it is a good first step. However, access to essential reproductive and other services must remain available, and successful implementation will require thoughtful compromises.

– Alicia Ouellette and David Pratt

Alicia Ouellette ( and David Pratt ( both teach at Albany Law School.

Published on: December 19, 2006
Published in: Health Care Reform & Policy, Human Reproduction

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