SENATE BILL REPORT

SB 6123

BYSenators Barr, Deccio, Johnson, West, Conner and Anderson

Exempting rural hospitals from the rate approval functions of the state hospital commission.

Senate Committee on Health Care & Corrections

Senate Hearing Date(s):January 12, 1988

Senate Staff:Scott Plack (786-7409)

AS OF JANUARY 13, 1988

BACKGROUND:

The Washington State Hospital Commission was established in 1973 to regulate hospital costs by assuring a reasonable relationship between hospital charges and costs.  The Commission reviews and prospectively approves requests for hospital budget and rate changes as well as amendments to budget requests.  It also conducts year-end reviews of each hospital's financial performance to determine conformance to the Commission's approved rates.

The practice of approving hospital budgets for rural hospitals is criticized.  The falling occupancy rates in these facilities is creating a financial dilemma where fixed costs are spread among fewer and fewer patients.  The Commission has responded to this by granting wide flexibility to rural hospitals when approving their budgets.  Often budgets are approved as submitted without modifications.  Because of this Commission practice some question the continued need for them to approve rural hospital budgets.  Hospitals claim compliance costs are draining their limited financial resources.  In addition, most rural hospitals are district hospitals and as public bodies have an inherent consumer oversight through the election of district commissioners.

SUMMARY:

Rural hospitals are defined.

Rural hospitals are exempt for rate approval requirements under the state Hospital Commission statutes.  Hospital data reporting requirements are maintained.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested January 6, 1988