Senator’s play for medical business stirs conflict of interest concerns

Credit: Bob Andres

Credit: Bob Andres

Ben Watson — doctor, entrepreneur and Georgia senator — knows how to heal, and he knows how to make a buck. He recently used his elected position to propose legislation that could help him do both.

It’s in legislative limbo now, but the subject of his proposal is a hotly contested one: relaxing restrictions that prevent private practices from providing services, such as cancer treatments or types of outpatient surgeries, typically done at hospitals. Lifting the rules, known as “Certificate of Need,” could allow the multi-speciality medical practice Watson, R-Savannah, co-founded to run profitable outpatient surgery centers.

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Watson argues easing CON rules would create more choices for patients at a lower cost. Critics say doing so would allow practices like Watson’s to cherry-pick the few profitable services that hospitals depend on to help offset the cost of treating uninsured patients — a burden private practices don’t have to bear.

The fact that Watson himself introduced the legislation is seen by his critics as a brazen conflict of interest.

Watson protests that he is a citizen legislator, applying his expertise on the subject he knows best, to help patients and expand options.

The one thing both sides may agree on is what’s driving the issue and the controversy: money.

“This is part of a broader culture at the Capitol, which allows people to get entirely too comfortable to bring legislation that, in this case, could directly impact their own business and potentially make them a lot of money,” said Sen. Josh McKoon, a Columbus Republican and member of the Senate Ethics Committee.

“The question you’re really asking is, is this a conflict of interest?” Watson said. “According to our rules, this does not single me out. So it is not a conflict of interest. Having said that, it could affect my group. It could affect groups in Rome, Gainesville, Atlanta and Columbus.”

‘This is not over’

Watson says he has dropped his efforts for his bills, Senate Bills 157 and SB 158, at least for now and won't push them for the rest of the year. He ran into some fierce opposition. But the reason he gave for standing down is uncertainty in Washington over the health care law.

One of his principal opponents, the president of the Georgia Alliance of Community Hospitals, is still wary. Watson’s bills could be in play next year since 2017 is the first year of a two-year session. And any other bill that opens up that portion of the law could become a vehicle for inserting the provisions.

“This is not over,” said the alliance president, Monty Veazey. “This was just a skirmish.”

Watson’s colleagues were caught in the crossfire, some in the uncomfortable position of having put their names on the bills as co-sponsors after hearing his pitch, before hearing the scope of arguments from the opposition.

One surprise co-sponsor of Watson’s bill is Lester Jackson, a Democrat of Savannah, in Watson’s own Chatham County.

“Sen. Watson gave a strong argument about expanding care,” Jackson said. “I want to be about listening.”

The issue could not be more timely there. The parent company of Memorial University Medical Center, the public hospital serving the Savannah area, this month declared a staggering $44 million operating loss for 2016. That’s following a $25 million loss for the year before. If someday Memorial can’t make its debt payments, county taxpayers will be on the hook.

Maggie Gill, the outgoing CEO of Memorial Health, co-wrote a letter to legislators about multiple CON bills, including Watson’s, recently introduced.

If enacted, “every community hospital in our state would be at risk,” they wrote. “Despite what proponents of CON changes may say, health care is not a free market. No one is competing for uninsured patients.”

A battle ahead

The CON debate is perennial.

Lobbyists every year enc

ourage lawmakers to lift the CON restrictions that protect hospitals’ lines of business. They say it’s about giving patients more affordable choices, and they typically promise to include a quota of patients who can’t pay full price as part of their clientele.

This year a half-dozen measures involving CON restrictions have been proposed. Watson's SB 157 and SB 158 could benefit his business, SouthCoast Health, and others in their advocacy group IndDocSenate Bill 123 and House Bill 464 would relax the mandate that 65 percent of Cancer Treatment Centers of America's patients come from out of state.

Meanwhile, hospital lobbyists argue eliminating CON rules would deliver a severe financial blow to hospitals — many of them in rural Georgia — that are already in dire financial straits.

Hospitals, they say, are forced to treat every patient who walks in the door no matter whether they can pay and have high overhead costs to keep emergency departments and other life-saving services open to communities. So businesses that poach the profitable services like straightforward cancer treatment or outpatient surgery sap hospitals of income and staff.

Getting CON approval is a lengthy — and expensive — process that requires medical providers to prove there is a genuine need for the new facilities or services they want to provide in a region.

The CON battle will reach a crescendo on Friday, “Crossover Day,” the deadline for any bill to stay alive this year by passing one chamber, the House or the Senate.

A conflict of interest?

“We’re strongly opposed to (Watson’s bills), as are all Georgia’s community hospitals,” said Leo Reichert, general counsel of Wellstar Health System, which owns a hospital that could be in the path of the alleged cherry-picking. “They do nothing to advance health care.”

Watson readily admits his private practice is interested in the legislation, and he would not rule out revisiting his bills next year. He points out that nonprofit hospitals have some advantages that private practices don’t, like tax breaks.

While Watson's introduction of a proposal that his own company has advocated for raised eyebrows at the Capitol, it's not new territory for legislators. And it's a good thing, Watson said.

“The citizen legislature has bankers, farmers, pharmacists, insurance agents and doctors,” Watson said. “These issues are very complicated … I turn to the banker because I want somebody who actually works in the industry. I don’t want somebody who depends on the lobbyist to drive their point of view.”

Senate rules expressly forbid senators from using their position for private gain and from having conflicts of interest. But they get around that by citing a related provision that only forbids voting for a gain that is “unique” to the senator.

McKoon said that’s their “get out of jail free” card.

Ethics advocate William Perry agreed.

“It clearly is a conflict of interest,” he said. “This bill and his pursuit of it and vote on it will put more money in his pocket. I’m not surprised people involved in the process don’t see it because they don’t seem to have a measure. Nor seem to care.”