Massachusetts Legislation Seeks Greater Scrutiny Of Hospitals’ Offshore Accounts | WAMC

Massachusetts Legislation Seeks Greater Scrutiny Of Hospitals’ Offshore Accounts

Jun 18, 2019

A bill in the Massachusetts statehouse is stoking a long-running disagreement in the Berkshires.

The Massachusetts Nurses Association – the state’s largest nurses’ union – has had a checkered relationship with Berkshire Health Systems, the county’s largest healthcare provider and one of its largest employers. In June 2018, a bitter contract negotiation between the two ended after almost two years, a strike, a lockout, and a number of demonstrations. Then came an unsuccessful attempt by the MNA in the fall to convince voters to impose strict staffing ratios on hospitals statewide – one that the healthcare industry spent millions combating.

Question 1 went down overwhelmingly.

Now, the union has turned its sights to a legislative effort to corral its powerful opponents.

“This bill is called The Act Relative To Hospital Profit Transparency and Fairness," said Democratic State Representative Tricia Farley-Bouvier of the 3rd Berkshire District. “My colleague Josh Cutler from Duxbury filed this bill, and the idea behind it is to ensure that the funds that go into hospitals – an awful lot of those funds are public dollars. They’re either collected from taxes, or – there’s an awful lot of support in healthcare from the public dollar. And so where public dollars go, there should be great transparency.”

The MNA has embraced the bill as a means of increasing pressure on hospitals to reveal how they use money – which, as Farley-Bouvier says, is often taxpayer money. Using tax documents from 2017, the MNA says that 16 hospitals that are funded over 60% by public money have over $1.6 billion in offshore accounts.

“If you have that amount of money, it should really be going towards the patients and towards the care and towards the health of the community, especially if they’re all not-for-profits," said Berkshire Medical Center nurse and MNA member Mark Brodeur.

He notes that the bill also raises other questions about the state of health care in Massachusetts, particularly in the way that it scrutinizes the pay gaps between administrators and workers.

“Should a CEO be making a hundred times more than what the lowest paid employee is paid?” asked Brodeur.

He says given how much taxpayers invest in health care, the bill represents a step toward more appropriate regulation of state health care providers.

“We’re seeing cuts across the state to beds in different ways," Brodeur told WAMC. "And if they have a billion or more dollars in offshore accounts why isn’t that money being used to better serve the community?”

“Like several hundred other health care systems around the country, Berkshire Health Systems covers its risk of professional and general liability through a program of self-insurance," said BHS spokesperson Michael Leary. “Self-funding those risks rather than paying premiums to a commercial insurance company results in significant savings for hospitals and health systems. Those savings are then re-invested in patient care services.”

He says BHS started its self-insurance program in 2004, and that it employs an international insurance actuarial firm to determine how much to invest in the fund.

“The extent that money set aside in the self-insurance fund is not needed to pay claims and expenses, it is then returned to Berkshire Health Systems for patient care purposes," Leary told WAMC. "The self-insurance entity is housed in the Cayman Islands, not to gain any tax benefits – because Berkshire Health Systems is in fact exempt from federal and state taxation – but for regulator simplicity.”

Leary acknowledged that the hospital has set aside around $13.5 million for its self-insurance fund.

“It should be noted that almost none of that $13.5 million is located in the Cayman Islands, but is in fact invested in the United States and managed by TD Bank in Burlington, Vermont," said the spokesperson. "The amount held in the Cayman Islands is currently about $130,000 and that represents the funds necessary only to pay immediate claims and expenses.” 

TD Bank did not respond to a request for comment on this story.

Farley-Bouvier is one of the state legislators who will decide whether hospital systems like BHS will face greater scrutiny during this session. For her part, she says she supports the bill in theory.

“At first glance, this seems like it’s a good idea," she told WAMC. "It’s something that is worth looking into.”