For this discussion, please see the SC JEDA/Greenville County Notice of public hearing for the potential GHS/Palmetto $1.5 billion bond issuance by SC JEDA, a SC government entity, (https://drive.google.com/file/d/19RCyo9VdN86UNEQfRhaEzgJXFLA5IkNY/view). Basically, ~$630 million in Greenville Health System debt will be combined with ~$870 million in Palmetto Health System Debt. GHS revenue is approaching ~$2.5 Billion while Palmetto revenue is only ~$1.7 Billion, yet Palmetto’s debt is far higher than GHS’s which means it’s more risky (some of Palmetto’s debt is also tied to a $72 million Medicare fraud conviction). Higher risks equals higher costs due to possible future default. This will eventually cost hard-working Greenville County healthcare consumers more money. This bond issuance is not in the best interest of Greenville County citizens. It increases the default risk of our healthcare system in the upstate and the bond amalgamation/refinance does not save or create any jobs as required by SC JEDA.
Last year, GHS leadership illegally took a multi-billion taxpayer asset (GHS) for nothing (the token $4 million per year in charity payments were already the taxpayer’s money). A lawsuit is in lower court to stop this illegal privatization. That lawsuit is ongoing. A few months ago, GHS leadership announced it would be forming a partnership with Palmetto Health in the Columbia area. Now, GHS leadership and Palmetto want to co-mingle their combined $1.5 billion debt. This co-mingling will make it harder to “unscramble the eggs” should the lawsuit be won, so the co-mingling will again hurt Greenville County taxpayers.
The public hearing notice never discusses that the new bonds will be separately payable by each hospital entity as has been implied. It says the bonds will be used to refinance a total of ~$1.5 billion of existing bonds of various GHS and Palmetto entities ( called Projects, including Oconee, Laurens, Toumey and other hospitals).
SC JEDA is the bond Issuer and the SC Health Company is the Borrower. SC Health Company was formed as the new umbrella entity that controls GHS and Palmetto. As seen in the Notice, SC Health Company will be responsible for the payment of all of the bonds. This Notice makes no mention of each hospital site being responsible for the new bonds separately. Why? Because that is how the bonds are structured via the SC Health Company, a company that is run by Co-CEO’s Riordan and Beaman. The new bond issuance will effectively co-mingle all debt of all the Projects (all the hospitals) mentioned in the Notice This includes co-mingling the Toumey Hospital $84 million debt with GHS debt.
In 2013 Toumey Healthcare System, a charitable nonprofit in Sumter, was convicted of Medicare Fraud (Stark Act) by the US DOJ. Toumey was fined ~$237.4 million, but the US DOJ knocked that conviction fine down to $72.4 million. The CEO of Toumey was also fined $ 1 million and barred from managing federal healthcare programs for four years. (https://www.justice.gov/opa/pr/former-chief-executive-south-carolina-hospital-pays-1-million-and-agrees-exclusion-settle) Shortly thereafter, financially distressed and convicted Toumey Healthcare became part of Palmetto Healthcare.
With this new bond refinancing, GHS debt will be co-mingled with the debt of a Toumey Hospital that was convicted of Medicare Fraud. So, does this Bond issuance co-mingle good GHS debt with the debt of financially troubled entities? Yes! Should Greenville County Councils support such a co-mingling? NO!
This can be compared to the housing mortgage crisis where good home mortgages were packaged with junk home mortgages and sold as top notch investment instruments. What resulted was the economic crash, banks failed, etc.
As mentioned, there is an ongoing lawsuit against GHS/UAO/SCO in lower court because GHS leadership illegally took a multi-billion taxpayer asset for nothing. This new bond issuance should not be allowed because it also “scrambles the eggs” making it very difficult to untangle GHS from this massive amalgamation of GHS and Palmetto via the SC Health Company (Borrower).
If this bond issuance is merely paying off existing bonds, how can that create any new jobs or save any jobs as required by SC JEDA enabling law? SC JEDA stands for South Carolina Jobs Economic Development Authority, “jobs” is in the name. SC JEDA should lend money to an organization that would actually create thousands of jobs!
If GHS says they have become private (which is objected to via the lawsuit), then why do they need SC JEDA, a government entity, to get those new bonds? Why do they need Greenville County or SC JEDA involved with obtaining new bonds? Is the main purpose of the new bond issuance merely to scramble the eggs in relation to the lawsuit?
Greenville County Council should not even vote on this proposed resolution for the above reasons.
Healthcare consolidation has been shown over and over to reduce competition which drives up healthcare prices and reduces quality which in turn hurts the poor the most. This is fact, not opinion. Hospitals executives keep talking about reduced healthcare costs via these mergers, but there is no evidence of any reductions in healthcare costs to Greenville County healthcare consumers when the financially struggling Oconee and Laurens Hospital Systems became part of GHS. The evidence only reveals healthcare executives reaping huge salaries and bonuses and secretive golden coffin retirement deals as healthcare is monopolized and prices skyrocket.
Why would any Greenville County Councilor support a bond issuance to enable such a consolidation? Do Greenville County Councilors trust our court system to properly adjudicate this illegal GHS privatization? Shouldn’t SC JEDA and Greenville County Council wait until the court case has been fully adjudicated? It is the only moral thing to do. GHS leadership tried twice to short circuit the judicial process by trying to ram this illegal privatization directly through the SC Supreme Court. Those Supreme Court Justices correctly refused to rule on such a case that had not been properly adjudicated in the lower courts.
Healthcare consolidation only hurts the middle class and the poor. Scholarly and objective research proves this point. Don’t rely on hospital executives’ deceptions and the biased studies they promote via their lobby group called the American Hospital Association (AHA). (The AHA which should be called the American Hospital Monopolization Association.) The AHA helped to write, promote and pass Obamacare. Hospital Executives still overwhelmingly support Obamacare. Why? Because Obamacare is the primary reason why hospitals are consolidating into regional monopolies. An AHA-controlled nonprofit also recently ran local radio adds here in Greenville and across the country telling folks to urge their federal legislators to vote against the Obamacare repeal bill in Washington earlier this year.
This healthcare consolidation taking place in SC is a slow moving train wreck that will be far worse than the failed SCANA-Santee-Cooper nuclear power project. No one paid attention when legislation (Base Load Review Act) was passed a decade ago that led to the failed $9 Billion nuclear power project. There is a chance to prevent such a similar disaster in the near future by a vote against this bond resolution.
Thomas Barilovits is a Greenville County Taxpayer with an engineering degree from Clemson and an MBA from the University of Chicago. He is fighting this GHS illegal privatization and this bond issuance having studied healthcare and this GHS privatization issue for the last 2.5 years