Fighting to Keep a Medical Center Public

March 28, 2007

A union representing State University of New York professors filed suit Tuesday to prevent the privatization of SUNY Upstate Medical University in Syracuse.

The suit is the latest response to the sweeping recommendation put forth by the state’s Commission on Health Care Facilities in the 21st Century – commonly termed the Berger Commission – to close nine New York hospitals and restructure nearly 50 others to reduce excess capacity. The commission's recommendations automatically became state law January 1 after the Legislature failed to reject its report.

Among the recommendations that have become law: To join privately-held Crouse Hospital and SUNY Upstate Medical Center under “a single unified governance structure” controlled by “an entity other than the State University of New York.” Opponents of the merger have expressed concerns that privatization of the “public trust” could detract from the hospital’s teaching mission and result in cuts to some of the hospital’s less profitable services, including the burn center, trauma unit and HIV treatment center. More than 2,000 people have signed an online petition protesting the transfer of the hospital from SUNY control: “Privatization has been proven not to be a viable remedy,” one anonymous signer wrote.

The United University Professions, the American Federation of Teachers affiliate representing 32,000 SUNY faculty, including 2,200 Upstate Medical University employees, filed suit in state court Tuesday arguing that the Berger Commission’s recommendation to transfer the hospital from SUNY control was unconstitutional, in that the commission “usurped” the decision-making role assigned to elected officials and lacked the authority to privatize a public entity. The suit challenges the privatization of the entire SUNY Upstate Medical University, which consists of four colleges in addition to the teaching hospital, as opposed to just the University Hospital, because it's unclear whether the commission report -- which references the "Upstate Medical Center" -- applies to the entire university, a union spokesman said. (The university president agreed that the terminology about what would be covered is ambiguous.)

“It was not up to the Berger Commission to make a public policy decision about a public institution,” William E. Scheuerman, the union president, said in a statement. “Only the state Legislature has the authority to make a policy decision to take a public entity out of public control, and there is no rationale for making such a decision for Upstate Medical University.”

The New York State Department of Health has been served 12 lawsuits challenging the Berger Commission so far, said Marc Carey, spokesman for the department, a defendant in the union’s suit along with the new Democratic governor, Eliot Spitzer. Of those 12 lawsuits, three decisions have been reached, Carey said, all upholding the Berger recommendations. “The Department of Health is charged with implementing those recommendations. We're moving ahead on the implementation process, as required,” he said in response to the union's suit.

The recommendations in the Berger Commission’s November report would cut the number of hospital beds by 4,200, or about 7 percent, statewide. The commission members argue that excess capacity weakens the overall health care system by increasing costs, fueling unnecessary duplication of services, jeopardizing quality of care and exerting financial pressures on hospitals that, facing low occupancy rates, may be forced to close or cut back on less profitable services, particularly for vulnerable populations. Since 1983, 70 New York hospitals and more than 63 nursing homes have closed, according to the report. The commission members also cite an insufficient primary care system and unmet needs for home and community-based services.

Since the commission’s report became law January 1, Governor Spitzer has announced a plan to “fundamentally reform” the state’s health care system by “decreasing costs while increasing coverage.” The crux of his plan focuses on cutting the number of uninsured in half within four years and developing a plan for universal health care -- while reining in Medicaid spending in part by imposing a freeze on rates paid to nursing homes and hospitals. "To be clear," he said in a January speech, "we cannot achieve this goal [of universal health care] unless we first restructure our health delivery care system to lower health care costs."

“[B]ecause of wasteful state subsidies and the state’s failure to make strategic choices, tax dollars have been spent on empty hospital and nursing home beds instead of insuring our 400,000 uninsured children,” Governor Spitzer said in reference to the Berger Commission during the speech. He also criticized the high cost of medical education in New York, which he said averaged $77,000 per graduate resident in 2005, compared to $21,000 spent per resident in California. A spokesman for Governor Spitzer declined to comment on the union's lawsuit Tuesday.

But David R. Smith, president of SUNY Upstate Medical University, said that while he agrees with many of the central tenets underlying the Berger Commission’s work, including a need to improve primary care services and create a more efficient system, privatizing Upstate Medical University is not the way to reach those goals.

“Berger wanted to create efficiency, but what they failed to look at is, ‘What’s the cost of trying to extricate University Hospital from a medical school?'” said Smith, who declined to comment on the faculty union’s lawsuit but instead spoke broadly about the university’s response to the commission. Smith indicated that the cost of privatizing the hospital would total $700 million to $886 million.

“We share personnel, we share IT infrastructure, parking, payroll, security,” said Smith, adding that more than 100 faculty are paid by both the university and the hospital, a fact that enables the hospital to recruit doctors in minor specialties to split their time teaching and practicing in Syracuse. He said that after learning the cost of privatization, the state health department began considering an approach to maintain the hospital’s public status under the umbrella of a nonprofit entity that would oversee both Crouse and University Hospitals. But Smith, who has proposed consolidating Crouse and University Hospital under SUNY's control, said the health department's current approach seems inconsistent with state law, and furthermore could create a confusing and contradictory governance structure.

Smith said he has concerns about the effect privatization would have on the teaching mission and on less profitable services like the burn center. But, he added, “It's the law of unintended consequences that bothers me the most – that is, what it’s doing for morale, recruitment, medical students coming up to me and saying, ‘Will I get my degree from Upstate Medical University?’” Even attempts to replace equipment used to treat cancer patients have been stalled as the fate of the hospital hangs in the air, Smith said.

“That’s what’s unconscionable about all of this. This report with all of its vagaries has created an environment of uncertainty.”

 

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