Con­tra­cep­tive clash

Re­li­gious groups weigh op­tions on new re­quire­ment

Modern Healthcare - - COVER STORY - Joe Carl­son

Catholic hospi­tal ex­ec­u­tives are pon­der­ing ways to com­ply with a new fed­eral re­quire­ment to pro­vide their em­ploy­ees with con­tra­cep­tives the church con­sid­ers un­eth­i­cal, while re­li­gious or­ga­ni­za­tions ex­am­ine ways to chal­lenge the rule be­fore it takes ef­fect for them in 2013.

Two small re­li­gious col­leges have al­ready filed fed­eral law­suits in Colorado and Washington based on the in­terim final rule that was un­veiled last year, and a spokes­woman con­firmed that the U.S. Con­fer­ence of Catholic Bish­ops in Washington is eval­u­at­ing its le­gal op­tions.

“It’s too early to say what kind of strat­egy the USCCB will de­cide on. There are many op­tions. There is a leg­isla­tive op­tion, as well as a le­gal op­tion. No decision has been made,” said Sis­ter Mary Ann Walsh, spokes­woman for the bish­ops con­fer­ence. “It’s a free­dom of re­li­gion is­sue. It’s the gov­ern­ment mak­ing in­cur­sions into the role of the church. It’s like the gov­ern­ment jump­ing into the sanc­tu­ary and telling us what to teach.”

The Pa­tient Pro­tec­tion and Af­ford­able Care Act re­quires in­sur­ers to pro­vide ba­sic pre­ven­tive-care ser­vices to ben­e­fi­cia­ries with­out charg­ing co-pay­ments or de­ductibles, although the law al­lowed the HHS to de­fine those ben­e­fits in the fu­ture.

Last July, the In­sti­tute of Medicine rec­om­mended that all Food and Drug Ad­min­stra­tion-ap­proved con­tra­cep­tives— in­clud­ing reg­u­lar hor­mone-based treat­ments and emer­gency “morn­ing af­ter” pills—should be deemed pre­ven­tive care and of­fered by in­sur­ers with­out pa­tient pay­ments. HHS’ in­terim final rule re­leased the fol­low­ing month did just that, but it also raised the prospect that that the Obama ad­min­is­tra­tion would carve out ex­emp­tions for re­li­gious em­ploy­ers that con­sider con­tra­cep­tives and abor­ti­fa­cients im­moral.

On Jan. 20, HHS Sec­re­tary Kath­leen Se­be­lius an­nounced the pol­icy that will be in­cluded in the up­com­ing final rule, which will al­low ex­emp­tions only for not-for-profit or­ga­ni­za­tions whose pur­pose is “the in­cul­ca­tion of re­li­gious val­ues” and that pri­mar­ily em­ploy and serve peo­ple who share its re­li­gious tenets.

Crit­ics say the def­i­ni­tion clearly does not in­clude re­li­gious hos­pi­tals, schools and so­cial ser­vice agen­cies that em­ploy and serve many peo­ple who do not share their re­li­gious be­liefs. Fed­eral of­fi­cials said in the text of the in­terim final rule that the def­i­ni­tion of “re­li­gious or­ga­ni­za­tion” was based on reg­u­la­tions in most states that ex­empt faith or­ga­ni­za­tions from sim­i­lar in­sur­ance-cov­er­age rules.

“We are be­fud­dled that this ad­min­is­tra­tion has taken a fun­da­men­tally hos­tile view to­ward

would do so in the next two to four years.

Dig­nity Health has not ac­quired a hospi­tal since 2007, when it added St. Mary’s Re­gional Med­i­cal Cen­ter in Reno, Nev., and the sys­tem has been search­ing for a buyer for that 269bed hospi­tal.

A pub­lished re­port quoted Dean say­ing of­fi­cials from non-catholic hos­pi­tals in­ter­ested in af­fil­i­at­ing with CHW seemed reluc­tant about join­ing a Catholic sys­tem, wor­ried that they’d have to be­come Catholic.

Dean down­played that dy­namic when asked in an in­ter­view to elab­o­rate on how the sys­tem’s Catholic spon­sor­ship may have de­railed CHW’S pre­vi­ous ef­forts to add hos­pi­tals. “We had rapid growth over the last decade and two decades; that’s a mis­nomer and not a cor­rect state­ment.”

The sys­tem re­ported $917 mil­lion in net in­come for fis­cal 2011, which ended June 30, 2011, an 89% in­crease from $485.7 mil­lion in 2010. Op­er­at­ing in­come in­creased 138% to $197.6 mil­lion in fis­cal 2011 from $83.2 mil­lion the pre­vi­ous year.

Though fi­nan­cial an­a­lysts say the move may aid Dig­nity Health’s ex­pan­sion ef­forts, nei­ther Moody’s nor Stan­dard & Poor’s ad­justed its credit rat­ings af­ter hear­ing the an­nounce­ment. Both com­pa­nies said there hasn’t been enough time to re­view the changes and in­tend to mon­i­tor the long-term im­pact.

Martin Ar­rick, a man­ag­ing di­rec­tor in S&P’S Public Fi­nance Rat­ings Group, said drop­ping the church af­fil­i­a­tion will ac­cel­er­ate merger and ac­qui­si­tion plans.

Dig­nity Health’s board of di­rec­tors now serves as the top level of gov­er­nance. Pre­vi­ously, the sys­tem’s six Catholic spon­sor­ing con­gre­ga­tions served that func­tion. A new group, dubbed the Spon­sor­ship Coun­cil, will now hold di­rect re­spon­si­bil­ity for the sys­tem’s Catholic hos­pi­tals and fa­cil­i­ties.

Unique struc­ture

The new lead­er­ship in­fra­struc­ture makes Dig­nity Health unique, Ar­rick said. He views that as a pos­i­tive, be­cause prospec­tive deals would al­low the sys­tem to ad­dress prob­lems that his­tor­i­cally get ig­nored, such as sup­ply chain con­sol­i­da­tion. “I don’t think this struc­ture, per se, speaks to whether a merger will or won’t ul­ti­mately be suc­cess­ful,” Ar­rick said. “I just think the struc­ture makes it eas­ier for Catholics and nonCatholics to work to­gether, that’s a key point.”

Danello, mean­while, sug­gested that fric­tion with the church’s po­si­tions, in ad­di­tion to the need for growth, may have mo­ti­vated the re­struc­tur­ing, re­call­ing that Pope Bene­dict XVI re­cently warned Amer­i­can bish­ops of a ris­ing sect of rad­i­cal sec­u­lar­ism that threat­ens Catholic val­ues in Amer­ica.

In 2010, Chw-af­fil­i­ated St. Joseph’s Hospi­tal and Med­i­cal Cen­ter, Phoenix, pro­vided a case study in that con­flict af­ter Phoenix Bishop Thomas Olm­sted stripped the hospi­tal of its of­fi­cial Catholic sta­tus.

Olm­sted de­clared that the hospi­tal’s staff vi­o­lated church di­rec­tives when doc­tors per-

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