Banner could begin restricting capacity as Covid surges

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(Deposit Photo)

A top doctor at the state’s largest hospital network said the facilities could begin to impose capacity restrictions at the rate Covid is multiplying in Arizona.

In a wide-ranging news conference Tuesday, Dr. Marjorie Bessel, chief clinical officer at Banner Health, said the 71 children admitted with the virus last month is double the figure from a month before.

The good news, she said, is most pediatric cases the hospitals have seen so far do not require treatment in an intensive-care unit. But Bessel said that may be only a temporary situation.

“This does not mean that the virus cannot have a serious impact on children,” she said, pointing out the experience in states like Louisiana, Florida and Texas where the number of children in ICUs has spiked. In New Orleans, all the pediatric ICU beds were full late last week.

Bessell also stressed that any child getting in-person instruction should definitely be masked but repeatedly sidestepped questions about whether schools should mandate their use.

“The way that we get to that is something that I will leave to others,” she said.

But Gov. Doug Ducey has no interest in allowing school boards to make that decision, saying the best solution to the problem is people getting vaccinated.

Spokesman C.J. Karamargin acknowledged Tuesday the vaccine is not available for anyone younger than 12. But he said his boss remains convinced that this decision should be made not by schools but by parents.

It isn’t just Banner dealing with a new spike of cases.

The state Department of Health Services on Tuesday reported 1,470 in-patient beds statewide occupied by Covid patients, the highest since Feb. 25, before the vaccine was available to most Arizonans.

There is a similar spike in Covid patients in intensive-care units.

What makes that significant is that Bessel said the typical Covid ICU patient ends up staying in the unit for more than a week. And that’s just part of the problem.

Marjorie Bessel
Marjorie Bessel

“They will be in our hospitals for quite a bit of time as they both receive intensive care as well as then recover before they go and be discharged,” she said.

The health department also reported another 2,582 cases on Tuesday, making it a full week of new illnesses over the 2,000 threshold. In fact, the agency, filling in data as reports come in, said the figure actually hit 3,117 last week.

There also were an additional 12 deaths reported Tuesday, bringing the statewide total to 18,400.

All that goes to concerns about what the future looks like.

“At this time we are operating without capacity constraints,” Bessel said. “But I will say with the surge that we’re beginning to experience and we’re reporting out here through the media we are concerned if that trajectory continues.”

Last year, as cases first spiked, the governor issued an executive order to limit elective surgeries to ensure there is sufficient space for not just Covid patients but others who need more immediate care.

That, in turn, created some financial problems for hospitals who depend on those procedures, like knee and hip replacements. In fact, the Arizona Hospital and Healthcare Association reported losses of 30% to 40% a month.

“At this time we are managing taking care of those who have Covid as well as those who have non-Covid,” Bessel said. “We would like to continue to do that for as long as possible and, hopefully, throughout this surge.”

Complicating matters is staffing.

Bessel said Banner is raising salaries in a bid to recruit and retain not just nurses but other support staff, including imposing a $15 an hour minimum wage. That compares with the $12.15 set in state law.

The system currently has 1,057 bedside vacancies for registered nurses and 347 of what Bessel called nursing support role vacancies.

There also are plans to bring in about 1,500 “traveling nurses” to fill needs.

On one hand, she said, that is not unusual. Bessel said extra nurses are brought in every winter season to deal with seasonal respiratory diseases.

“But the magnitude of what we’re likely going to need due to the Covid surge, of course, is significant and concerning at this time,” she said.

On top of that is the possibility of resignations or firings as Banner staffers refuse to comply with a company mandate that they be vaccinated by Nov. 1. Bessel did not say how many or what percentage of staff have yet to meet the requirement but said “we still have a ways to go.”

Still, Bessel said, that doesn’t mean a bunch of workers will be gone at the end of October.

“We still have a large number of individuals that either are in the process of getting vaccinated or submitting their vaccine card to us,” she said.

California union seeks pay raise for Arizona hospital workers

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A California union is funding a measure in a bid to convince Arizona voters to force hospitals here to pay their workers more.

An initiative drive being launched Monday would mandate that everyone working at a hospital get an immediate 5 percent pay hike if the measure is approved by voters in 2020. There then would be successive 5 percent pay increases for the following three years.

Rodd McLeod, spokesman for what’s being dubbed the Healthcare Rising Arizona campaign, said that would apply at all levels, including medical staff, nurses, social workers, orderlies and even custodians. And with a prior voter-approved state law already mandating a $12 an hour minimum wage beginning in January, that would put the base salary for hospital workers after the fourth year at $14.59.

McLeod said it is in the public interest to raise hospital wages, even if it does raise costs for hospitals and, potentially, by extension for patients who do not have insurance.

Higher wages are just part of what is being promoted by the campaign financed by the Service Employees International Union. The initiative, if it makes the ballot and is approved, also would:

put provisions directly into Arizona law to ensure patients can get coverage for prior existing conditions; impose new infection control protocols for Arizona hospitals; institute a more comprehensive law than now exists to protect patients from “surprise” medical bills.

A spokesman for the Arizona Hospital and Healthcare Association declined to comment.

This isn’t the first ballot foray by the California branch of the union.

But McLeod said the fact that this is being proposed and financed by an out-of-state organization − one with a history of doing battle with hospitals − should not deter Arizonans from supporting it.

“We have a health care system that costs a lot of money and doesn’t deliver results that are as good as they could be,” he said.

McLeod said the measure, if enacted, will improve patient protections, saying that 99,000 people a year get “serious infections” in hospitals.

Then there’s that issue of surprise billing, with patients admitted to hospitals after checking their insurance coverage, undergoing a procedure and only later finding out that someone on the medical team, like an anesthesiologist, isn’t on hospital staff, isn’t part of the insurer’s “in-network” providers, and doesn’t accept what the insurer is willing to pay.

A new law that took effect earlier this year addresses that in part by setting up a procedure for patients and doctors to have disputes resolved. But McLeod said that still doesn’t prevent the surprise bills in the first place, and only covers disputes of more than $1,000.

Potentially more significant would be language prohibiting insurers from denying coverage for patients with prior existing conditions.

McLeod noted that Arizona Attorney General Mark Brnovich is among those trying to get federal courts to kill the Affordable Care Act. If successful that lawsuit also would wipe out the requirement to cover preexisting conditions, as Congress has yet to enact a replacement if the litigation is successful.

But a key part is the issue of salaries for workers at all levels, at least those below management.

“Arizona has among the highest turnover rates for hospital workers in the country,” McLeod said. “You have one in five leaving for jobs in other states or leaving for other professions because the salaries are so low.”

That, he said, results in worker shortages which, in turn, affects patients.

“I sat in the emergency room waiting for a long time because there’s not enough people to handle the work,” McLeod said.

He said the initiative is at least related in part to the fact that there are fewer and fewer people in unions who can engage in collective bargaining on issues like salaries and working conditions.

“I think there’s a real desire to use creative problem solving to figure out how to improve people’s standard of living and the quality of health care,” McLeod said.

The California-based United Healthcare Workers West branch of the SEIU is no stranger to the ballot process here.

This is the same group that sought in 2016 to cap the pay of hospital executives at no more than what the president of the United States is paid, or $450,000 a year. But after gathering what it claimed was more than 281,000 signatures − far more than needed − the union decided to scrap the effort in the face of challenges to the validity of many of those signatures.

Then last year the same organization sought to cap the amount dialysis centers can charge patients at no more than 15 percent above their costs, with a requirement for refunds if profits exceeded that amount. They scrapped that effort, with a union spokesman saying it was instead focusing on similar measures in California and Ohio.

Consider a professional association, not a union

(Photo by Alex Proimus via flickr/Creative Commons)
(Photo by Alex Proimus via flickr/Creative Commons)

Since Arizona passed the Voter Protection Act in 1998, we are a target for citizens’ ballot initiatives used to pass laws championed by out-of-state interest groups. What we have learned is some ballot initiatives are essentially a Trojan horse for unions attempting to enter our state. The union starts by pretending to champion causes to make life better, when in fact these attempts are to get attention and, in the door, to increase their membership. 

Selina Bliss
Selina Bliss

Let’s take Healthcare Rising Arizona as an example. Healthcare Rising Arizona is the name used for the California Service Employees International Union-United Healthcare Workers. Their recent attempt to pass the four-part Stop Surprise Billing & Protect Patients Act using a citizens’ ballot initiative was a disguise for growing bargaining power with their 95,000 union members based in Los Angeles. Fortunately for Arizona, this ballot initiative from this out-of-state special interest group was disqualified from the ballot by a Maricopa Superior Court judge. Had this benign-sounding initiative passed, costs for health care to patients would have increased and staffing of health care workers would have suffered. Worth noting is the unintended consequences this initiative would’ve caused as Arizona already has a law to address surprise billing, so this initiative would have caused more red tape and regulation while taking time with patients away from nurses. After this failed attempt in 2020, we knew they would be back. It appears their next project is targeting debt collectors in a nicely called initiative named the Predatory Debt Collection Protection Act. 

Time to consider an alternative. Most professions have a professional association to advocate for their members. Examples in Arizona include the Arizona Nurses Association, the Arizona Medical Association, and the Arizona Hospital and Healthcare Association. The Arizona Nurses Association is a statewide membership-based professional association of licensed nurses. Founded in 1919, it is the oldest and largest nursing association in Arizona. We are a diverse group of nurses who share a common purpose; to advance excellence in nursing. As a professional association, we are an alternative to a union. We work to advance the nursing profession through advocacy, professional development, research, continuing education, and certification in order to promote a healthy Arizona. 

As a professional association, when it comes to ethical analysis and decision making, we are bound by our code of ethics. Ratified by the American Nurses Association in 1950, the code of ethics guides how we are accountable to the profession and to society. As a volunteer leader in my professional association, I would be remiss if I sit by and fail to educate our association members, professional nurses, and the public of the differences in advocacy by a professional association versus that of a union. 

In 2020, the Arizona Nurses Association, the Arizona Medical Association, and the Arizona Hospital and Healthcare Association banded together against the union’s most recent ballot initiative. While we as professional associations don’t always agree on legislative policy, we did agree the recent initiative by the Service Employees International Union was bad for the health and health care of Arizonans and would hurt health care workers. My intention is that insight helps enlighten health care professionals and the public for alternatives to out-of-state unions and their influence on Arizona legislation and health care policy. 

-Dr. Selina Bliss is a registered nurse in Prescott, where she has lived since 1971 and is president of the Arizona Nurses Association. 

Ducey defends support of Graham-Cassidy


Gov. Doug Ducey is defending his support for the latest bid to repeal the Affordable Care Act even though he has no idea how much federal aid that would cost the state and how many Arizonans would lose health care.

“The numbers are important,” the governor said Wednesday. Ducey said his staff is analyzing the elements of the Graham-Cassidy bill on the Arizona Health Care Cost Containment System, the state’s Medicaid program, which U.S. Senate Republican leaders are trying to get voted on before the end of the month.

But the governor said he remains convinced that what comes next will be better than what exists now, even without yet knowing the effect on the state and its residents.

“Obamacare is a failure,” he said. “It’s time for it to go.”

Yet Ducey sidestepped a question of whether he could guarantee that none of the 400,000 people who have been added to the rolls of the state’s Medicaid program because of the Affordable Care Act would again find themselves without health insurance.

“Well, I haven’t seen the final bill,” the governor said of the legislation he has endorsed. Anyway, Ducey said he believes the measure will provide Arizona with “the longest possible transition so that we can move people from Medicaid into a superior insurance product.”

He did not say what that would be.

Ducey also acknowledged that the proposal by Republican Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana would financially penalize states like Arizona, which expanded Medicaid eligibility long before there was an Affordable Care Act. That’s the result of voter approval in 2000 of Proposition 204 which guaranteed care for everyone up to the federal poverty level at a time when Medicaid eligibility was far less.

In fact, the governor cited a similar provision in earlier bills in a letter to Arizona Sen. John McCain as one of the “critical changes” that needed to be made to those now-failed attempts to make them acceptable.

“I don’t want a bill that is going to penalize Arizona,” Ducey said Wednesday despite what is in the current version of the measure. But the governor said he believes that even if Graham-Cassidy does become law and the penalty is in it, it won’t be the end of the discussion.

“It will take this bill and more to do and get our health care system in the right shape,” the governor said.

That’s assuming Senate Majority Leader Mitch McConnell can line up the votes, particularly that of McCain whose opposition to the earlier “skinny repeal” helped to doom that measure.

As of Wednesday the state’s senior senator was still undecided. But he repeated his statement that he wants the issue considered in “regular order,” meaning full-blown hearings and the opportunity for amendment.

That’s not what McConnell is considering, with the latest proposal being a single hearing in the Homeland Security Committee and a Sept. 30 deadline for action.

Ducey’s strong and early support of the new federal legislation puts him at odds with some of his Republican colleagues.

In a letter Tuesday, Kasich of Ohio, Charles Baker of Massachusetts, Phil Scott of Vermont and Brian Sandoval of Nevada all urged McConnell to scrap the plan and instead support “bipartisan efforts to make health care more available and affordable for all Americans.”

All are from states that several studies have shown will be, like Arizona, financial losers under the Graham-Cassidy plan.

One study from the Center for Budget and Policy Priorities puts the annual loss to Arizona at $1.6 billion by 2026.

“The estimates you are referring to right now come from a left-wing or left-leaning organization that has a real stake in maintaining the status quo,” Ducey responded.

A separate report from Avalere Health which does consulting for the health care industry has cumulative losses between 2020 and 2026 at $11 billion. At least part of that is because the federal block grants to states would grow at a set rate rather than based on the number of people who enroll.

And after 2026, all the block grant dollars would go away.

For Ducey, however, the touchstone is getting rid of the Affordable Care Act.

“If anything, I think the deciding issue of the last eight years in terms of elections has been Obamacare,” the governor said. “It’s time for it to go.”

Ducey said he wants a bill to give states “maximum flexibility,” not only for Medicaid but also in the private insurance market. And he sniffed at the idea that what’s being proposed will result in fewer dollars from Washington, even as reducing federal expenditures has been one of the key goals of all of the proposals to undo the Affordable Care Act.

“There is no federal money,” Ducey said.

“All of the money is our money that is sent to Washington, D.C. and then comes back to us in a lower figure,” he said. “Somewhere there must be some overhead.”

But Ducey provided no specifics on how Arizona will be able provide care to as many people who are in the Medicaid program now with fewer federal dollars. In essence, the governor said he’s just convinced it would be better and more efficient.

“We know how to do things in the state of Arizona,” he said, noting that AHCCCS and its system of prepaid care on a per-capita basis has been cited by many as superior to fee-for-service Medicaid programs in other states.

Ducey also took a slap of sorts at the Arizona Hospital and Healthcare Association and its national affiliate, both of who have come out against the Graham-Cassidy plan. He said what’s in place now “you can’t even call it a health care system.”

“A system actually delivers a product or service,” the governor said. “This is a system that begins in Washington. D.C. and then it takes care of the insurance providers, the pharmaceutical companies and the hospital organizations before it runs over the doctors and leaves the patients with an insurance card the health care system won’t accept.”

In a statement Tuesday, Greg Vidor, president of the Arizona group said the plan “falls short” on the goal of quality and affordable care.

“This proposal erodes critical protections for patients and consumers, and would lead to costlier premiums for many individuals, especially those with preexisting conditions,” he said in a prepared statement. “Millions would lose coverage altogether.”

Ducey might allow elective surgeries under certain conditions

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Gov. Doug Ducey said Wednesday he’s looking to restore the ability of financially struggling Arizona hospitals to once again do elective surgeries.

The governor said he issued the directive last month to ensure that there is an adequate supply of personal protective equipment — masks, gowns and gloves — to handle what is expected to be a surge in the number of people hospitalized with COVID-19.

That peak is not expected until the end of this month, and possibly into May.

But in the meantime, Holly Ward, spokeswoman for the Arizona Hospital and Healthcare Association, said her members are hemorrhaging money because they’ve lost that business. And she said that there needs to be financial relief — and soon — to keep the doors open.

Ducey said he understands the problem.

“We’ve been working for the past 45 days to make sure we’ve got appropriate hospital capacity, ICU beds, personal protective equipment, ventilators, etc.” he told Capitol Media Services. And that, the governor said, required a halt to elective surgeries.

Now, Ducey said, he’s re-evaluating the situation.

Doug Ducey
Doug Ducey

“If we’re in a position where we’ve got enough supply that we have available inventory and we have product on the way as well, I am open minded to resuming elective surgery,” he said.

But when it occurs, it won’t be all at once.

“I would think this would be something where we would start with our rural hospitals first, and then, over a period of time, we would extend it into the urban core,” Ducey said. “It would be as soon as I have data that gives me the confidence to make a decision.”

Ward said that the hospitals agreed with Ducey’s original order.

“However, it is having dire financial consequences,” she said.

“Hospitals are reporting losses of 30 to 40 percent a month,” Ward said. “That’s a lot of financial bleeding that’s happening.”

She said loosening the restrictions on elective procedures, like knee surgeries and hip replacements, she said, will help.

But there’s more.

“We aren’t suggesting that elective surgeries are the be-all, end-all,” she said. Ward said that hospitals are just seeing fewer patients overall, including in emergency rooms.

The cause appears to be another of Ducey’s edict: his directive to Arizonans to remain at home unless they need to be out to work at an essential job or participate in essential services like shopping for groceries.

“People are staying home,” Ward said.

“They’re not having car accidents like they used to to go into the hospital,” she explained. “It’s not that day-in, day-out traffic that we would normally see.”

That complaint held no water with the governor.

“You want me to apologize for people not getting into car accidents?” he asked.

Policy issues aside, Ward said what hospitals need is some immediate and direct cash relief.

The governor last week provided some in the form of an additional $5.3 million in supplemental payments to “critical access hospitals,” those in rural areas located more than a 35-mile drive from any other hospital. And the state is advancing $50 million to hospitals in advance Medicaid payments, essentially fronting them money for services they have yet to provide.

Ward, however, said more is needed, whether from the state or the federal government.

How quickly an easing of Ducey’s ban on elective surgery could happen is dependent on several factors.

One is the question of when there will be a peak in the number of hospitalizations.

The governor last month directed hospitals to find another 13,000 beds by the end of this month on top of the 15,000 they already have. He also is working to reopen the closed St. Luke’s Hospital in Phoenix.

For the moment, there seems to be plenty of space. New information released this week shows total inpatient bed use in Arizona at less than 70 percent.

But Holly Poynter of the Arizona Department of Health Services says there are indications that the worst it yet to come.

She noted that Healthdata.org, which produces models for states and countries, predicts Arizona hitting its peak hospital need on April 30. Yet other models, Poynter said, have the peak further into May.

“Worst case scenario models are still predicting up to 13,000 (additional) hospital beds may be needed,” she said.

All this comes as the chief executive officers of Santa Cruz Valley Regional Hospital in Green Valley said he needs more immediate aid.

Kelly Adams said that, like other hospitals, his facility also has seen a sharp drop in revenues, with in-patient population down 50 to 55 percent and a drop of between 55 and 60 percent in emergency room visits.

But Adams also wants an immediate infusion of state aid, to the tune of $3 million. And he said he needs it soon if he is to make payroll this coming week.

Adams said that some of the help from Ducey’s prior statewide efforts have had only a minimal effect on his hospital. For example, he said, the facility didn’t get much relief from the governor’s decision to advance payments as the hospital serves very few Medicaid patients.

In a letter to Adams, Christina Corieri, the governor’s chief economic adviser, said the state is “willing to partner” with the facility during the pandemic. There are, however, strings attached.

One is that the hospital cannot make any payments to private owners, investors, shareholders, management consultants or board members. It also requires hospital executives to take a 20 percent pay cut and not receive any bonuses.

And Corieri said the hospital must remain in compliance with all federal and state conditions and licensing requirements, a condition she said was added “in light of previous violations.”

“I applaud them for asking the hard questions,” Adams said. “We’re working all those through.”

He said the 49-bed hospital, which emerged from bankruptcy in 2018 — he took over shortly thereafter — is viable if it can weather this financial problem and get the state help it needs.

“It takes years to turn a hospital into profitability,” Adams said.


Groups challenge proposed ballot measures in court


Business groups are trying to keep Arizonans from voting on proposals to hike taxes on the most wealthy and give hospital workers a pay hike.

One challenge, filed by a group financed by the Arizona Chamber of Commerce and Industry, alleges that the legally required 100-word description given to initiative petition signers about the effects of the tax increase to generate nearly $1 billion a year for K-12 education fails to adequately describe how it works. Foes contend that those who were asked to put the measure on the November ballot were never told it was an entirely new tax and how it would result in “a near-doubling” of the marginal tax rates owed by many businesses.

If that claim sounds familiar, it should. The chamber used it successfully two years ago in its bid to keep a similar measure off the 2018 ballot.

The other from a group financed by the Arizona Hospital and Healthcare Association contends that the initiative process was flawed because it never identified as Service Employees International Union – United Healthcare Workers West as its sponsor and source of its funds.

Foes of this measure also claim that the 100-word description on petitions is “highly misleading.”

David Lujan, the director of the Arizona Center for Economic Progress and the author of the tax plan, said the challenge by the chamber is “disappointing but not surprising.”

David Lujan
David Lujan

“The chamber has continually shown that they’re more interested in protecting well-paid CEOs rather than helping Arizona schools,” he said.

The proposal imposes what the initiative calls a 3.5 percent “surcharge” on incomes above $250,000 for individuals and $500,000 for married couples. Put another way, it would only be the earnings above that point that would be affected.

Challengers say that obscures the fact that people in that tax bracket already are paying a 4.5 percent state income tax on earnings at that level.

“Yet by saying the initiative ‘establishes a 3.5 percent surcharge’ on this income, the summary gives signers the misimpression that the income is currently untaxed,” wrote the attorneys for Arizonans for Great Schools and a Strong Economy, the chamber-financed group formed to fight the initiative.

They said it should have been portrayed to petition signers as an 8% tax rate on incomes above the threshold.

“A voter might be willing to tax their fellow citizens 3.5% but not 8%,” the attorneys are telling the judge. They said that should be listed as an 80 percent increase.

Lujan, however, said there’s nothing misleading about it.

For example, Lujan said, a couple earning $501,000 would pay the same tax as now on the money they earn. Then, there would be an additional 3.5% levy on $1,000 — the amount at which the tax kicks in, or $35.

Challengers also contend there are other misleading statements in that 100-word description, like the claim that the money would be used to “hire and increase salaries for teachers.” But they said the actual texts reveals the cash could be spent on those who “support student academic achievement,” a definition they say could include custodians and bus drivers.

There also is a claim that the measure would have a harsh effect on small businesses whose income tax is reported on their owners’ individual tax forms.

But Lujan said that ignores the fact that the tax is imposed not on the gross income of a business but only on what the business owner brings home, after paying all expenses like employees salaries, rent and utilities.


The measure the hospitals are seeking to quash would guarantee 20% raises over four years to certain hospital personnel, impose new infection-control standards on hospitals and put a provision in Arizona law designed to ensure that individuals with pre-existing health conditions can purchase insurance at affordable prices if the federal Affordable Care Act ultimately is voided by the courts or repealed by Congress.

Attorneys for the hospitals, in attempting to keep this off the November ballot, are relying in part on what appear to be technical issues with wording and the failure to define some of the terms.

hospital-featuredBut the lawsuit also takes aim at the claim that the measure, if approved “sets new minimum wages for direct care workers at private hospitals.”

“A reasonable voter would interpret ‘direct care workers’ to mean that wage rates will be adjusted for those directly involved in the care of patients such as a physician, nurse, or an imaging technician,” wrote attorney Brett Johnson.

In fact, he said, the text of the initiative instead refers to “direct care hospital workers.” And it defines that to include nurses, aides, technicians , janitorial and housekeeping staff, food service workers and nonmanagerial administrative staff — but not doctors.

Johnson also finds fault with the claim that the initiative, if approved, “prohibits insurers from discriminating against pre-existing conditions.” But he said that doesn’t make it clear that it would apply only to health and disability insurance and not things like life or property and casualty insurance.

“This broad overstatement is fraudulent and/or would cause a significant danger of confusion to a reasonable person,” the lawsuit says.

The lawsuit also takes aim at the wording of another provision designed to protect patients from “surprise out-of-network bills” they receive after it turns out that someone who cared for them in the hospital was not actually part of their insurer’s health care network.

Holly Ward, spokeswoman for the Arizona Hospital and Healthcare Association, said a measure like this is a bad idea in these “extraordinary times,” mentioning that staffers “are working tirelessly to care for everyone who comes in for care.”

“We don’t need to drive costs up for hospitals and ultimately patients,” she said.

Rodd McLeod, spokesman for the initiative, said the fact that the hospitals are going to court is telling.

“This lawsuit is just an admission by the hospitals that they’re not going to be able to convince Arizonans to vote against affordable health care at the ballot box so they’re going to try to deny voters a chance to have a vote at all,” he said.

McLeod also took a separate swat at state Sen. Vince Leach, R-Tucson, who signed on as a plaintiff with the hospitals. He said that Leach opposed legislation pushed by then-Gov. Jan Brewer to expand the state’s Medicaid program.

“So it’s no surprise to see him standing with millionaire CEOs and against ordinary families that get stuck with surprise bills,” McLeod said.

Leach declined to comment.

Both lawsuits now head to Maricopa County Superior Court where judges will consider the merits of the arguments. But in both cases the final decision is likely to come from Arizona Supreme Court.

Hospital group to challenge proposed ballot measure for pay hike

AHCCCS expansion on the ropes after federal matching funds decision

The state’s hospital industry is gearing up to fight a ballot measure that would require its members give virtually all their employees a 20 percent pay hike over four years.

Greg Ensell, spokesman for the Arizona Hospital and Healthcare Association said wages already are higher than the statewide average, at least when considering everyone employed by hospitals from top executives on down. And he said there is no hard evidence to back claims by supporters of the initiative being financed by a California-based union that the current wage structure is leading to staff shortages or high turnover.

The association also is opposed to another provision of the measure that seeks to impose new oversight about the incidence of hospital-acquired infections.

In a prepared statement, Ann-Marie Alameddin, the group’s president and chief executive officer, said the performance of Arizona hospitals already exceeds the national benchmark in the initiative.

Ensell said his association had no comment on two other provisions of the initiative that do not directly affect its members: ensuring that people with preexisting conditions can get insurance coverage and limits on the ability of insurers to refuse to cover medical conditions because the treatment was provided by an out-of-network physician.

On that latter plan, Marc Osborne who lobbies for Blue Cross and Blue Shield of Arizona said insurers are studying the language but have no immediate reaction. Insurers and doctors did agree to a less comprehensive 2017 law designed to provide a method for patients to appeal.

Pre-existing conditions

The last two provisions in particular appear to be issues likely to be popular with voters.

There is national attention to the issue of pre-existing conditions, particularly with Congress debating whether to scrap the Affordable Care Act and its prohibition against denying coverage to those who already are ill and lawsuits. That, in turn, could help build support for what is crafted as a take-it-or-leave-it package.

But campaign spokesman Rodd McLeod said these are not designed to be carrots to get voters to approve the entire plan, saying the four issues are all related.

“It’s designed to deal with the problems of our health care system,” he said. McLeod said it all relates to the kind of care people get in a hospital, how effective the hospital is working, and the ability of patients to pay for that care.

Backers have until July 2 to get the required 237,645 valid signatures on petitions to put the package on the 2020 ballot.

Jenny David, a labor and delivery nurse at St. Joseph’s Hospital in Phoenix, claimed that Arizona has among the highest turnover in hospital staff in the country, “with nearly one in five leaving for jobs in other states, or leaving the profession altogether.”

“Because salaries are so low, hospital worker shortages have real consequences for patients, such as emergency room overcrowding, reduced hospital beds and longer wait times for surgeries,” she said. And the issue, said David, goes beyond the direct medical staff.

“Sometimes we see patients sit in triage for hours because we don’t have a clean room to put them in,” she said.

David acknowledged that the measure, if approved, would mandate 20 percent pay hikes over four years — but only for those working in hospitals.

The salaries of people with similar jobs elsewhere in the private sector, ranging from medical staff at a doctor’s office to custodians in commercial buildings, would be unaffected. But David said that’s no reason to vote against the measure.

“I don’t think it should only apply to us,” she said. “All workers in Arizona should have fair pay.”

But the initiative, David conceded, does not do that.

“We’re focused on health care,” she said.

Ballot organizers did not immediately produce any data backing the claim that staff turnover at Arizona hospitals is higher than the national average.

Ensell also had no state-specific turnover data. But he did have his own figures, at least on salary, saying that in 2018 the average wage of a full-time employee at an Arizona hospital was more than $75,000, versus an average Arizona wage of $49,290. That hospital figure, however, also covers doctors and medical professionals who are staffers, and hospital executives.

Horror Stories

Others at a Monday press conference to kick off the initiative drive had their own stories to tell.

Delores Stoeser said her husband died from what she said was methicillin-resistant staphylococcus aureus – MRSA – that he contracted at a hospital.

Fernando Vicino spoke of having to have a valve in his aorta replaced.

“The Affordable Care Act could be repealed or overturned and I would not be able to find insurance at all,” he said.

And Steve Wasson complained about being stuck with high hospital bills for his wife after he said there were multiple tests performed on her without anyone checking with him, explaining their necessity — or, more to the point, telling him ahead of time what it would cost. But the provision on out-of-network billing would not have helped Wasson because he had no insurance at all.


Proposed law protects unconscious women from non-consensual pelvic exams


A state lawmaker wants to prevent doctors in Arizona from using unconscious women to help train interns in how to perform pelvic exams.

The proposal by Sen. Heather Carter, R-Cave Creek, would make it an act of unprofessional conduct for a doctor, nurse or physician to perform or supervise a pelvic examination on any anesthetized or unconscious patient without first getting the woman’s “informed consent” to the procedure. That would subject any violators to loss of their ability to practice medicine.

SB 1027 does have an exception in cases where it is “medically necessary,” such as an unconscious woman who is believed to be a rape victim being brought into a hospital.

Carter isn’t the only lawmaker seeking to address the issue. Rep. Nancy Barto, R-Phoenix, has introduced an identical measure in the House as HB 2051.

Heather Carter
Heather Carter

Holly Ward, spokeswoman for the Arizona Hospital and Healthcare Association said that’s already the practice followed by members of her organization. The Arizona Medical Association would not comment.

But Carter said none of that has reduced the number of women who have approached her and asked her to provide them some legal protections. And she said it’s an issue of critical importance.

“A woman does not want to undergo a procedure that she hasn’t consented to,” Carter said. “We want to make sure that we have protections in place for the women of Arizona so that this doesn’t happen in Arizona.”

Barto shares that sentiment.

“I just think it’s outrageous that consent is not specific to these pelvic exams on anesthetized women,” she said. “It just doesn’t make any sense to me.”

This apparently is a national issue.

In a story earlier this year, ELLE magazine reported it surveyed 101 medical students from seven major American medical schools. The magazine said 92 percent reported performing a pelvic exam on an anesthetized women, with 61 percent of that group saying they did not have explicit patient consent.

And in an article published on VICE, writer Hannah Harris Green reports that it is legal in 42 states for doctors training staff to have them do pelvic exams on patients even if it has nothing to do with the medical treatment being sought – and even if the woman is not in a position to agree.

Pelvic exams are invasive and they require a doctor’s visual and physical examination of a woman’s reproductive organs, including inserting fingers during the exam.

Nancy Barto
Nancy Barto

More to the point is doctors training students on a patient, who may be unconscious, how to perform the procedure.

Barto said she appreciates the importance of training physicians. But she said “informed consent” has to have a meaning.

“It’s not implied consent if you go under (anesthetic) or at a teaching hospital that your whole body is up for grabs, literally,” she said.

Carter said she also understands that many hospitals are teaching centers. And she said it is not unusual for a patient, admitted to a hospital, to be asked to sign a form agreeing to allow medical students to observe and be part of the medical team.

But she said there’s a line that needs to be drawn.

Consider, Carter said, a women going into a hospital for routine surgery.

“You’re going in for knee surgery and you’re training the orthopedic surgeon resident on how to do a knee surgery,” she said. “You’ve consented to that orthopedic surgeon being in the room while they’re doing the knee surgery.”

Carter said a woman wouldn’t want another resident coming along a doing a pelvic exam, particularly if is for educational and not therapeutic purposes.

Her legislation, she said, would draw that line.

Carter said no one has specifically told her she has been a victim. But the issue, Carter said, is clearly on the minds of many.

“This question has come up in a number of different settings which tells me that there are people talking about this issue that we should have protection in place for women in Arizona,” she said.

New York Gov. Andrew Cuomo signed a similar measure in October.

Research staffers in Connecticut reported earlier this year that they found laws in California, Hawaii, Iowa, Oregon and Virginia that expressly limit doctors and medical students from performing pelvic examination on anesthetized or unconscious patients for training purposes. But legislation to do that in Connecticut faltered, as it also did in New Hampshire.

Carter acknowledged that patients who are admitted into hospitals generally sign documents which give fairly broad consent for medical procedures to be performed. But she said that should not be used as a reason to permit what she believes is a particularly invasive procedure.

“When you go into a hospital for a procedure you want to make sure that you receive the care that you consent to,” Carter said. “In addition, if you are unconscious and need care that is medically necessary that you have access to that type of care.”

She said that, however, should not become an excuse for other, unrelated procedures, especially when the patient is in no position to refuse.

“This law is carefully crafted to ensure that anything that is done to a woman while they are anesthetized is done with their consent and the protections that are in place protect the woman,” Carter said.

State’s hospital profits soar

Arizona hospitals overall saw huge increases in their profits last year despite — or more likely, because of — Covid.

New figures from the Arizona Health Care Cost Containment System said total profits topped $1.5 billion. That is 33 percent higher than in 2019 and far above anything reported in the past decade.

It also found nearly 75% of hospitals with a positive operating margin. While there have been higher figures in the past, that is still up 4.5 percentage points from the prior year.

And the average profitability was $13.9 million.

Still, there are vast differences — even among hospitals under the same management.

Banner Desert Medical Center in Mesa, for example, posted a net operating profit of more than $153 million on total revenues in excess of $802 million for a net operating margin of 19.1%. And Banner Thunderbird has a $96.7 million profit with a net operating profit of 16%.

But Banner University Medical Center in Tucson actually posted a nearly $5.5 million loss on revenues of more than $866 million. Still, the hospital is in a far better financial condition that 2019 when it lost almost $55 million.

All this comes against the backdrop of Covid.

During 2020, Gov. Doug Ducey imposed a ban on elective surgeries, at least in part to ensure that there was an adequate supply of personal protective equipment — masks, gowns and gloves — to handle the anticipated surge in the number of people hospitalized with the virus. That, however, drew some  criticism from the Arizona Hospital and Healthcare Association.

Spokeswoman Holly Ward said her members were hemorrhaging money because they’ve lost the more financially lucrative business of things like knee and hip replacements.

And then there was the cost of all that personal protective equipment.

But Marjorie Baldwin, a professor of economics at the W.P. Carey School of Business at Arizona State University, said there is another side to all this.

It starts, she said, with the change in the mix of patients.

“Typically, hospitals treat a majority of older patients on Medicare,” said Baldwin who is a health economist. By contrast, Covid provided a larger mix of younger patients that might otherwise not be in a hospital.

More to the point, the private insurance these patients often have pays more than Medicare.

Then there’s the fact that hospitals are not racking up the same losses for “uncompensated care,” bills not paid by people without either government or private insurance and who lack the financial resources to pay their bills. That’s because the federal government agreed to pick up the cost for treating Covid for anyone without insurance.

Marjorie Baldwin

“That’s a huge effect on profits,” Baldwin said.

On top of that there were various federal subsidies to hospitals to help deal with the costs incurred of treating Covid patients.

But potentially the biggest thing has to do with medical billing and something called “diagnosis related groups,” or DRGs.

That system, already in use by Medicare, pays hospitals based on the DRG. That is designed to both standardize payments and encourage cost containment as a hospital knows it will be getting a specific set amount to treat a specific ailment, not more.

So someone admitted for a ruptured appendix is in one DRG, versus a women undergoing standard labor.

But Baldwin said if a patient was diagnosed with Covid, there is a surcharge that hospitals are allowed to impose.

It’s even more complex.

That surcharge is built on the assumption that Covid patients will require a certain level of care.

“But some Covid patients might not require ICU care or the intense care that the subsidy was designed to cover,” she said. “And so hospitals could make a profit on those patients.”

And there’s more.

And Baldwin said a patient who actually tests positive for Covid actually might be admitted to the hospital for some other reason.

“But the hospital could still put that they have the Covid diagnosis and get the reimbursement,” she said. “And there’s strong incentives for hospitals to do that.”

There are other things that have happened on the state level, even before Covid, that have worked to improve the bottom lines of hospitals.

As governor, Jan Brewer pushed through a measure to expand eligibility for AHCCCS, the state’s Medicaid program. And she came up with a scheme to pay for it through a tax on hospitals.

But here’s the thing: It was structured so that each hospital chain would pay less in the assessment than it would make up by having fewer uninsured people coming to emergency rooms unable to pay. So hospitals all supported it.

It apparently worked.

In 2013 the average hospital had $8.9 million of uncompensated care, 6.7% of its total expenses. By 2020 that figure had dropped to $4.3 million, or 2.5%.

Ducey, state treasurer at the time with his eyes on the governor’s office, campaigned against AHCCCS expansion.

But now, with it in place, he actually expanded on Brewer’s funding method, signing legislation last year to create the Health Care Investment Fund. That is a totally new assessment that, after all is said and done, will mean a $900 million net increase for hospitals in 2021.

Baldwin said large urban hospitals already were in a better position to deal with Covid.

That is reflected in those numbers for Banner Health, the largest hospital system in the state, and, specifically, in their larger facilities.

A spokeswoman for Banner said staffers were still reviewing the numbers and declined to immediately comment on the report.

There was a similar pattern at Tucson Medical Center, where its $34.2 million profit on $613.2 million in income is a $6.7 million increase over the prior year.

Hospital spokeswoman Angela Pittenger cited some of the same issues as did Baldwin.

“The reduction of elective surgeries created a significant negative impact on our hospital’s operating margin,” she said. And without the federal aid, Pittenger said, 2020 “would have been financially devastating” to the hospital.

Those additional dollars, she said, bolstered the hospital’s bottom line and positioned it to invest in staff and other resources.

And Pittenger also cited that Health Care Investment Fund which kicked in in October 2020.

Baldwin said that, by contrast, some smaller “safety net” hospitals were not doing as well.

Copper Queen Community Hospital in Bisbee did manage to post a profit of nearly $657,000 on $42.6 million in income. But that profit is nearly $5.9 million less than the year before.

And Yavapai Regional Medical Center, found its profits shrinking by nearly $16.9 million between 2019 and 2020, though it still managed to post a $50.5 million profit on $372.7 million in income.


Hospital / 2020 Net operating profit (loss) in millions / Change from prior year


Abrazo Heart / $12.3 / $4.6

Abrazo Arrowhead / $25.3 / (-$0.4)

Abrazo Central / $7.6 / (-$16.8)

Abrazo Mesa / $0.5 / $2.1

Abrazo Scottsdale  / $10.1 / $4.5

Abrazo Surprise / (-$0.4) / *

Abrazo West / $34.6 / $2.1

Arizona General / (-$7.0) / $4.1

Arizona Orthopedic Surgical & Specialty / $2.7 / $0.2

Arizona Spine & Joint / $8.0 / (-$0.06)

Aurora Behavioral Health System / $2.7 / $0.3

Avenir Behavioral Center / $2.6 / $3.4

Banner Baywood / $29.2 / $4.1

Banner Behavioral Health / $1.4 / 0.9

Banner Casa Grande / $12.6 / $12.9

Banner Del E. Webb / $51.9 / $3.7

Banner Desert / $153.2 / $15.6

Banner Estrella / $69.4 / $16.4

Banner Gateway / $96.7 / $29.4

Banner Goldfield / (-$2.3) / (0.2)

Banner Heart / $41.2 / $5.1

Banner Ironwood / $15.6 / $4.8

Banner Ocotillo / (-$8.0) / *

Banner Payson / $1.8 / (-$6.9)

Banner Rehabilitation Phoenix / (-$3.0) / *

Banner Rehabilitation West / (-$3.3) / *

Banner Thunderbird / $96.7 / $31.5

Banner University Phoenix / $40.8 / $41.6

Banner University South / $23.2 / (-$5.2)

Banner University Tucson / (-$5.5) / $49.3

Benson / $6.6 / $7.6

Canyon Vista / (-$2.6) / (-$10.6)

Carondelet Marana / ($1.9) / 0.7

Chandler Regional / $47.0 / 0.7

Cobre Valley Regional / $3.9 / 0.05

Copper Queen Community / $0.7 / (-$5.8)

Copper Springs / $4.6 / (-$3.3)

CORE Institute Specialty / $9.0 / (-$2.8)

Cornerstone Behavior Health El Dorado / $1.1 / $0.7

Cornerstone Southeast Arizona / $2.0 / $1.6

Dignity East Valley Rehabilitation / $7.9 / $0.5

Dignity General Mesa / (-$19.1) / $1.1

Destiny Springs $1.8 / $4.8

Flagstaff Medical / $39.3 / (-$11.3)

Florence Hospital / (-$5.4) / *

Guidance Center / $0.3 / (-$0.5)

Havasu Regional / $69.6 / $1.1

Haven Senior Horizons / $1.2 / (-$0.1)

HealthSouth East Valley Rehabilitation / $3.8 / (-$2.3)

HealthSouth Rehabilitation Tucson / $5.5 / (-$0.01)

HealthSouth Rehabilitation Southern Arizona / (-$0.4) / ($0.1)

HealthSouth Scottsdale Rehabilitation / ($0.3) / (-$3.1)

HealthSouth Valley of the Sun Rehabilitation / $0.6 / (-$1.3)

Holy Cross / $8.8 / $8.3

HonorHealth Deer Valley / $18.9 / $0.7

HonorHealth John C. Lincoln / $32.3 / $11.0

HonorHealth Rehabilitation / $4.1 / $2.5

HonorHealth Osborn   / $16.5 / (-$14.1)

HonorHealth Scottsdale Shea / $47.3 / $17.0

Honor Health Scottsdale Thompson Peak / $13.0 / (-$0.2)

Kingman Regional / (-$0.6) / (-$3.3)

La Paz Regional / $1.5 / $1.1

Little Colorado / $1.7 / $0.8

Mayo Clinic / $105.5 / (-$56.3)

Medical Behavioral Northern Arizona / (-$3.1) *

Mercy Gilbert / $25.1 / (-$2.5)

Mountain Valley Regional Rehabilitation / $1.1 / (-$0.2)

Mountain Vista / $2.1 / $15.9

Mt. Graham / (-$5.4) / (-$6.3)

Northern Cochise / (-$1.5) / (-$2.0)

Northwest / $29.1 / (-$15.9)

Oasis Behavioral Health / $8.7 / (-$0.2)

Oasis / $3.7 / (-$1.0)

Oro Valley / $15.6 / (-$1.3)

Page / $1.0 / (-$1.8)

Palo Verde Behavioral / $2.0 / (-$0.01)

Phoenix Children’s / $196.4 / $135.8

Phoenix Medical Psychiatric / (-$5.8) / *

Quail Run Behavioral / $8.3 / (-$1.1)

Rehabilitation of Northern Arizona / ($-0.1) / $0.8

Santa Cruz Valley Regional (fka Green Valley / (-$5.1) / $15.5

Select Specialty Phoenix / $4.1 / $0.4

Select Specialty Phoenix Downtown / $0.6 / (-$1.0)

Sonora Behavioral Health / $2.8 / (-$1.8)

Sonora Health and Emergency Center / (-$6.9) / *

St. Joseph’s Tucson / $12.7 / $35.6

St. Joseph’s Medical Center / $21.8 / $32.7

St. Joseph’s Westgate / $14.8 / $8.9

St. Luke’s Behavioral / $0.5 / (-$3.7)

St. Mary’s / (-$3.8) / $27.0

Summit Healthcare / (-$0.1) / $8.6

Tempe St. Luke’s / $5.3 / $9.1

TMC Geropsychiatric / $0.5 / $0.1

Tucson Medical Center / $34.2 / $6.7

Valley / $9.6 / (-$2.5)

Valley View / $1.7 / $2.6

Valleywise (fka Maricopa Medical) / ($-129.2) / (-$52.0)

Verde Valley / $26.5 / $0.2

Western Arizona Regional / $17.6 / $11.2

Wickenburg Community / (-$7.3) / (-$5.6)

Windhaven Psychiatric / (-$0.3) / $0.3

Yavapai Regional  / $50.5 / (-$16.9)

Yuma Regional / $13.5 / (-$0.4)

Yuma Rehabilitation / $6.7 / (-$1.3)

Summary / $1,500.7 / $392.7

* No 2019 figures

— Source: Arizona Health Care Cost Containment System





Tobacco industry up to its old tricks again


I read with great interest the article in the May 1 edition of the Arizona Republic on current efforts by the tobacco industry in the Arizona Legislature to block effective clean air measures of city and local governments. The Arizona Hospital and Healthcare Association has a long and proud history of battling the tobacco industry on a variety of public health measures that affect all Arizonans. We are well schooled in the industry’s tactics and their long history of advancing the use of tobacco while masquerading as public health advocates.

As far back as 1994, AzHHA was the first in the country to sponsor a ballot initiative to increase the tax on tobacco and earmark the money for expanding access to health care.  As recently as 2006, we, along with the cancer, heart and lung organizations, sponsored the Smoke Free Arizona Act – landmark legislation that has dramatically reduced the prevalence of tobacco use in our state.

From the perspective of the tobacco industry, there is no bigger prize than the enactment of state-level measures that preempt efforts by cities and towns to enact their own tough clean air ordinances. This kind of state legislation represents the holy grail of tobacco industry objectives across the country, because tough local smoking ordinances are the most effective tool in reducing tobacco use over time.

What makes this effort by the tobacco industry more sinister is that they will give almost any ground to achieve this objective. They might agree to modest regulation of tobacco; they will agree to increase the minimum age for buying cigarettes; they will agree to most anything to achieve their primary goal:  PREEMPTION.

Fortunately, the Republic article accurately states that we have Arizona legislators who are wise to the tobacco industry’s game.  Sen. Heather Carter, R-Cave Creek, among others, correctly notes that SB1147 “is a Big Tobacco bill.” I’d take it a step further and tell you that, for the tobacco industry, SB1147 is a dream come true.

Over time, various polls have shown that the public is usually far ahead of the political establishment in seeing through the tobacco industry’s smokescreen of advancing their own interests while seeming to promote a “public health” measure. It’s gratifying to see that we now have legislators of both parties who can see these tobacco industry efforts for what they are:  an attempt to secure their future at the expense of public health.

Carter is to be applauded for taking a courageous stand against this latest ploy by the tobacco industry.  She deserves our support and our heartfelt thanks.

John Rivers is past president of the Arizona Hospital and Healthcare Association from 1986 to 2011.

Under Ducey’s budget, hospitals will pay for his education spending

Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)
Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)

Arizona hospitals will pay more under Gov. Doug Ducey’s $10.1 billion spending plan.

The governor’s proposal, released last week, shows $79 million in “efficiency savings” or cuts to agency budgets for things like employee vacancies and lower utility bills.

But one item listed as an “efficiency savings” will actually increase the hospital assessment, which pays for Medicaid expansion, by $35 million.

That’s because the governor is proposing to move behavioral health services for childless adults to the same funding stream as acute care. Currently, tobacco taxes and the hospital assessment pay for acute care coverage for childless adults and those covered through Medicaid expansion.

Ducey will use that money to fund his spending priorities in education, as the majority of new spending in his budget, about $250 million, goes to schools.

The assessment will increase by 12 percent, generating $35 million, because of the policy change, according to the Governor’s Office of Strategic Planning and Budgeting.

AHCCCS Director Tom Betlach
AHCCCS Director Tom Betlach

By law, the AHCCCS director, Tom Betlach, can increase the hospital assessment without the Legislature’s approval.

All told, the hospital assessment will increase by $39 million, from $287 million to $326 million, with $4 million accounting for caseload growth.

The state integrated services for behavioral health and acute care to put both programs under AHCCCS in 2015, and the governor now wants to align the way the two sides are paid for, Ducey spokesman Daniel Scarpinato said.

Since the time the hospital assessment was adopted in 2013, hospitals have seen the amount they pay for uncompensated care – medical services that don’t get reimbursed – go down significantly, Scarpinato said.

“We want to work with (the hospitals). We think that this is obviously something that will be spread across all hospitals that are offering these services,” he said. “This obviously won’t have any impact on services.”

Greg Vigdor, president of the Arizona Hospital and Healthcare Association, said in a news release that his group is aware of the proposal and is “seeking further clarification in terms of the impact to Arizona hospitals.”

Another major piece of Ducey’s “efficiency savings” will come from transferring $15 million from the Arizona Health Care Cost Containment System to the Department of Economic Security to pay for health care for developmentally disabled children. AHCCCS’ general fund money will decrease by $15 million. But since general fund spending for DES will increase by a commensurate $15 million, the net savings is actually zero.

In other areas, the Department of Transportation will see a drop of $5.2 million in its general fund budget, replaced with funding from the State Highway Fund.

More than $2.8 million will be saved by implementing a cap on private prison capacity. According to state contracts, the Kingman and Red Rock prisons, operated by private prison companies, have to keep beds at 97 percent capacity. The state wants to leave the remaining 3 percent vacant.

The executive budge also proposes a one-time reduction of $1.8 million in the general fund for capital spending, but this money will be used to cover increased rent for state buildings.

Other smaller savings will come from lower energy and utility costs, vacancy savings and shifting money to special funds instead of the general fund. For example, a $1 million appropriation for AIDS reporting and surveillance will come from the Disease Control Research Fund.

Another $1 million will be swept from the Department of Tourism in the next fiscal year. The money will come from savings on the agency’s marketing and advertising budget.