News and Notes February 2, 2016

News and Notes February 2, 2016
The following is a summary of policy information concerning the top legislative initiatives of the Hampton Roads Chamber of Commerce.
Hampton Roads Chamber Supports Research and Development Tax Credit

The Hampton Roads Chamber has joined a broad coalition of business interests supporting HB 884 and SB 58 to create the major innovator Research and Development (R&D) tax credit and create strategic enhancements to the Commonwealth’s existing R&D tax credit for small, innovative businesses.

These enhancements include:

• Increasing the Statutory cap of Virginia’s refundable R&D credit for small, innovative businesses from $6M to $7M.

• Increasing the eligible research expenses for smaller businesses to 15 percent of the first $300,000 of the business Virginia qualified research and development expenses.

• Increasing the enhanced incentive for smaller businesses that conduct research in conjunction with a Virginia college or university.

• Provides an alternative simplified credit option modeled after federal law.

• Extends the sunset from January 1, 2019 to January 1, 2026.

The enhancements outlined above will make Virginia more competitive with other state’s R&D credits.

 

The Hampton Roads Chamber supports Passenger Rail

The Commonwealth’s Amtrak regional trains connect 76.4% of Virginia’s population and 82% of our employers with reliable, car-competitive intercity passenger rail service. The Hampton Roads region is served by two rail stations; one in Norfolk and one in Newport News. There are a number of bills under consideration during the 2016 General Assembly Session that would benefit the development of passenger rail including:

• HB 613 (Krizek D-44th) – Authorizes the Department of Rail and Public Transportation to acquire real estate or rights of way for the construction of railway lines.

•  Budget Amendments 449 #1H (Villanueva R 21st), Heretick (D 79th), Spruill (D 77th), Stolle (R 83rd), Ward (D 92nd). Dedicates $20M for advancing Tier 11 EIS for passenger rail from Hampton Roads to Richmond. Senate – 449 #4S Wagner (R 7th), Alexander (D 5th), Cosgrove (R 14th), DeSteph (R 8th) and Locke (D 2nd). Dedicates $20M for advancing Tier 11 EIS for passenger rail from Hampton Roads to Richmond.

How are our trains doing?

• Ridership +119% since 2007  Passengers Per Train - +44%

• Reliability 72% (2015)

Certificate of Public Need

The Hampton Roads Chamber of Commerce supports retaining the Certificate of Public Need law (COPN). COPN is designed to create stability in our health delivery system, control costs and ensure the quality of health care services. The COPN program is being debated heavily in this year’s General Assembly Session. There are bills introduced to reform COPN and bills introduced that would eliminate COPN. The following Editorial regarding the impact of COPN is written by Dr. Peter Bastone, President and CEO of Chesapeake Regional Healthcare, a Hampton Roads Chamber member. Repeal of Virginia’s COPN: Detrimental to our community hospitals Competition in the health care market that benefits the patient, the whole community and the common good is healthy. Allowing major health care systems, both for profit and nonprofit that dominate geographic areas, along with physician-owned facilities, to siphon dollars away from Virginia’s nonprofit community hospitals is detrimental to patients who need it most. If the Virginia legislature decides to fully repeal the Certificate of Public Need (COPN) law, the state’s community hospitals will surely be harmed financially as the underinsured and uninsured patient population filters to these hospitals with nowhere left to turn. As the leader of one of the few remaining independent hospitals in the state, I cannot help but worry about the consequences of COPN repeal.

If this repeal of the COPN law passes, Chesapeake Regional Healthcare will be forced to alone fight many battles similar to one we won in 2010. That year we fought off a competing health system’s desire to build a free-standing emergency room within a couple of miles to our facility. With the help of our physicians, community members and a supportive City Council, the additional ER was deemed unnecessary. The reason? Many felt that it would duplicate services already available in our area, driving up costs. If patient need had been of primary concern, the competing system had plenty of opportunity to serve patients by building the ER in other less affluent areas of the city, but declined to do so.

If the complex had been approved, Chesapeake Regional had the potential to lose $22 million in annual revenue, and that would have caused us to focus on the competition rather than the needs of the community and those most at risk. The proposal did not pass, but this example provides you with a glimpse of what Virginia’s health care environment might look like with the repeal of the COPN law. Ambulatory surgical centers (ASCs) and other high-reimbursement services would go up in affluent areas, with an eye on profit, and community hospitals would be left to provide the services to those who need them most, garnering low reimbursements as a result. With the loss of higher reimbursements to the competition, it is unlikely we would survive, leaving patients with fewer choices for high-quality care.

The argument in support of this legislation is based on the few states that have repealed certificates of need (CON). One example is my native state of California. The CON deregulation resulted in the establishment of facilities in high-income areas that drove down costs to patients and insurance companies at first, but over time, the business dynamics of needed volume and growth of operation costs began to affect the viability of these business ventures. This resulted in significant asset sell-off by nonprofit and for-profit conglomerates, which caused significant consolidations that provided lessaccess, built demand and increased costs to patients and insurance plans. This vicious cycle of growth consolidation left only a handful of surviving profitable provider networks.

I have heard some say that a COPN allows for a monopoly on services in a location, but this argument falters when you look at the possible future. A large health system could purposely duplicate services, suffocate smaller hospitals and buy up these failing institutions. Many hospitals owned by one system, would that not be considered monopolistic as well?

If the COPN process dissipates, there would be no regulation of the amount of charity care required by each new establishment or service addition. In fiscal year 2014, Chesapeake Regional provided $40 million in community support that included health screenings and health education in addition to financial contributions and charity care to the community. We write off millions of dollars in care each year, and other smaller community hospitals do the same. Not just because we are required, but because it aligns with the mission of our work: to serve our community and improve the health and well-being of our community members.

The COPN repeal would indeed result in community hospital layoffs impacting employees and the economy. If it were to come to that for us, our more than 2,100 employees and their families would be affected. From March 2014 – April 2015, we generated $245.2 million in economic activity and spent $169.1 million on goods and services to Virginia’s economy. The city, state and region would also suffer as a result of the repeal.

Virginia hospitals are already facing many significant challenges ahead. I implore our state legislature to consider updating and adjusting the COPN law, but to reconsider abolishing it. Please contemplate the impact it would have on the state’s community hospitals. We may be small, but the services and competition we provide benefit patients in a multitude of ways.

Peter F. Bastone,Dr.PH, MBA, MACHM

President and CEO

Chesapeake Regional Healthcare

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