Silver’s Stocks

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The New York Sun

The rush of attention surrounding the outside economic activities of state lawmakers had us looking through Assembly Speaker Silver’s financial disclosure forms, where we discovered that in the past few years, Mr. Silver has owned shares in both Columbia HCA and in Triad Hospitals. The press attention has focused on other areas; the New York Times had a dispatch on Mr. Silver’s loans to a firm that finances contingency-fee lawsuits, and our Jacob Gershman reported on legislation that would give state lawmakers a $52,000 a year bonus if they opted out of outside work such as that the speaker does for the law firm Weitz & Luxenberg.

What caught our eye were Mr. Silver’s investments in for-profit, publicly held hospital firms. After all, as we noted in our June 2, 2005, editorial, “Health Care We Can Profit From,” New York law essentially bans such firms from operating in our state. First, it imposes strict regulations on who can own a hospital (called a “character and competence test”) and then extends that test even to shareholders in a publicly traded for-profit hospital operator. Second, New York also blocks from running a hospital any corporation whose stock is owned by any other corporation.

That regulation effectively bans any public company from opening a medical center. While this technically leaves the door open for small groups of doctors who would want to open a physician-owned hospital (another form of for-profit), yet a third regulation stands in the way, one that requires any new hospital to demonstrate that it’s meeting an unserved need in the area where it wants to open.

As we noted back in 2005, changing the law would allow the kind of competition that has helped control costs in other states. One reason that New York’s Medicaid costs are more than Texas and California’s combined is that Texas and California have for-profit hospitals run by publicly traded companies, while New York does not. A 2002 study by two economists found that in areas with for-profit hospitals, it cost 2.4% less per patient to treat elderly heart-attack victims than in areas without for-profits. That savings came without any noticeable change in patient outcomes and, translated into New York’s annual Medicaid budget of more than $40 billion, would result in substantial savings.

The amounts of Mr. Silver’s stock holdings aren’t disclosed to the public, other than that they were more than $1,000. The need for more public disclosure is the topic for another editorial; Albany officials are subject to less public dislosure about their personal finances than federal lawmakers are. And it is true that Mr. Silver hasn’t singlehandedly blocked for-profit hospitals in New York; Republicans haven’t exactly been campaigning on the issue, either. Nor has the chairman of the Assembly’s Health Committee, Richard Gottfried.

But the fact remains: If Mr. Silver is comfortable personally investing in and owning shares of for-profit hospital companies that operate in other states, the consistent move would be for him to take the lead in changing the laws to allow those companies to operate in New York State. Otherwise, the speaker is sending a message that it’s okay for him to profit personally from a company’s treatment of patients in other states even if he doesn’t think the company is fit to treat New Yorkers. Or okay for him to go into a business in other states he wouldn’t allow New Yorkers to go into here.

The New York Sun

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