Controversial proposal to regulate hospital mergers advances in Legislature

Hospitals and health systems may have to report more information about how mergers would affect the care they provide if a controversial bill that passed the Washington Senate Thursday becomes law.

Senate Bill 5241, which cleared the chamber with only Democratic support, aims to increase regulation when hospitals and health systems combine, which supporters of the proposal argue can lead to more expensive and less accessible care.

The bill is driven in part by Democrats’ concerns about preserving access to abortion and other reproductive care, as well as gender-affirming care, particularly within health care organizations that have religious affiliations.

Republicans, meanwhile, are raising concerns about the bill bogging down small hospitals with new bureaucracy and how much power the legislation would extend to the attorney general. Under the bill, the state attorney general would gain new power to block or oversee mergers.

“This is about protections for our neighbors so that business interests don’t supersede their interests, so that we have a system that centers the impact on patients and on the workforce,” bill sponsor Sen. Emily Randall, D-Bremerton, said.

Under the proposal, hospitals and health systems would have new reporting requirements during mergers or purchases, such as providing documentation on how the leadership change would affect access to reproductive, gender-affirming, emergency, charity and end-of-life care.

It would also give the Attorney General’s Office power to determine if the transaction would negatively affect the community’s access to affordable health care.

The bill passed 28-21 after three hours of debate. Sen. Mark Mullet, of Issaquah, was the only Democrat to vote against the proposal.

Opponents argued the bill could have unintended consequences on small, rural hospitals that are already struggling financially and may be ill-equipped to deal with the new regulations.

“In a very real way, this is a life and death situation in some of the communities we represent,” Senate Minority Leader John Braun, R-Centralia, said.

‘One size fits all’

The proposal has been introduced before as part of a larger suite of legislation meant to expand and protect access to reproductive health care in Washington, following the fall of Roe v. Wade in 2022.

Much of Washington’s hospital system – organizations such as Providence Health and PeaceHealth – is affiliated with a religious organization, which supporters of the proposal say can often restrict access to reproductive health, gender-affirming or end-of-life care. According to a 2023 analysis by the Seattle Times, more than 48% of hospital beds are affiliated with a religious organization.

Randall said this new oversight could preserve access to the right to reproductive health care, which Washington voters have said for decades they want.

“A right without access is not a right,” Randall said. “If we continue to erode access to abortion care, then our neighbors will not be able to access that care in Washington.”

In addition to protecting these services, supporters of the proposal say mergers can result in higher costs for patients without necessarily more services.

Sen. Patty Kuderer, D-Bellevue, who described the proposal as one of the most consequential health care bills this session, said consolidation in the health care system is not what is best for the consumer.

Research from KFF Health News, a health policy research organization, has found that provider mergers and hospital consolidations can lead to higher prices and reduced access to care.

But Sen. Ann Rivers, R-La Center, said hospital mergers are not always large corporations combining. Sometimes, small hospitals want to partner with a cancer care clinic or another larger hospital to provide specialized services.

This bill may create a situation where those partnerships don’t exist, she added.

“We’re burying our small hospitals in paperwork,” Rivers said. “This bill puts paperwork over people.”

Sen. Shelly Short, R-Addy, called the bill a “one-size-fits-all” approach that would not work for the rural hospitals in her district.

Hospitals have struggled financially in recent years, often having deficits only exasperated by the COVID-19 pandemic. The Washington State Hospital Association testified last year against the policy, saying the financial situation of hospitals is “dire.”

Overstepping legislative authority

Under the Legislature’s proposal, the attorney general could disapprove of a merger or place certain conditions on it. The attorney general would also have to monitor any approved transaction for at least 10 years to ensure that care access and affordability are not disrupted.

Republicans argued against granting the attorney general this type of authority and suggested that if this kind of oversight were in place, the state’s Department of Health would be the best agency to handle it.

But Sen. Manka Dhingra, D-Redmond, said the attorney general is the best person to oversee a complex system like the health care system, especially because the office already has processes in place to protect consumers.

The proposal now heads to the state House of Representatives where it must go through the committee process and pass the full chamber before the legislative session ends on March 7.