Why do NC hospitals oppose CON reform?

Hospitals want to hold on to the healthcare of the past.  That’s why North Carolina has held on to one of the nation’s most restrictive Certificate of Need (CON) programs.  Hospitals are threatened because Certificate of Need reform would change the way they make money.

Certificate of Need regulations began across the country back in the 1970s with a noble mission designed to cut costs for consumers by preventing unnecessary and duplicative hospital facilities and overbuying of hospital equipment.  As healthcare has changed through the years, CON laws drawn up to reduce costs produced the unintended consequence of actually raising costs by eliminating competition and limiting patient's choices.  The potential savings of CON reform should not only save patients money, but also save taxpayers who foot the bill for Medicaid spending.

Hospitals say increased competition would benefit a handful of doctors while hurting their bottom line and threatening the services they provide.  The truth is 71% of surgeries today are outpatient or same day surgery.  Of those surgeries, 72% are performed at the highest cost hospital facilities.  CON reformers believe these procedures can be more affordable if performed at outpatient ambulatory surgery centers – providing patients lower healthcare costs and also give them more choice. 


How will CON reform save healthcare patients money?

Most people don’t realize that nearly three-quarters of all surgeries (71%) are same-day, outpatient surgery. Outpatient ambulatory surgery centers (ASCs) would provide an alternative to high hospital bills and give patients choice while maintaining quality healthcare.


You read in the press how much money hospitals make and how much money their CEOs make.  How would CON reform change that? 

Recent news stories showed that the Carolinas Healthcare hospital system CEO was paid more than $5.2 million in 2014.  Carolinas Healthcare reported net revenue of more than $8 billion in 2014.  (Charlotte Business Journal, 2/4/15)  Other hospitals pay their CEOs well – the Charlotte Business Journal reported that Novant’s CEO was compensated $8 million in 2013, including retirement payments.  Hospital records show that most hospitals hold hundreds of millions of dollars in cash reserves, sometimes in the billions.  As hospital systems get larger and larger, they make more and more money.


What kind of money could patients possibly save with CON reform?

One example how an outpatient ASC surgery procedure could cost less with CON reform would be an arthroscopic ACL knee surgery.  Within 25 miles of Charlotte, the procedure would cost $10,000 at an independent ASC surgery center in nearby Concord compared to $28,000 at a hospital-run orthopedic center in Charlotte.  Most people don’t know those types of healthcare disparities exist.  If they did know the difference, it is likely they would shop for more affordable healthcare services.


How does North Carolina compare to other states on Certificate of Need regulations? 

24 other states do not have CON laws restricting same-day, ambulatory surgery centers.  Of those states that still have CON, North Carolina’s regulations are the fourth strictest in the country.


Have there been any case studies or examples that would show that competition would lower healthcare costs while maintaining the quality North Carolina patients expect?

In 2005, the CON governing committee allowed gastrointestinal doctors to open endoscopy outpatient surgery centers.  Usage went up as people were screened for cancer at the same time cost savings were estimated at $224 million over six years.  More importantly, the death rate from colorectal cancer was cut by 53% for those who had colonoscopies and whose doctors removed pre-cancerous polyps.


What Certificate of Need regulations need changing the most to make NC healthcare more affordable?

The area where the most savings are quickly apparent is in the area of outpatient surgeries – where the building of Ambulatory Surgery Centers should save patients money and give them better choice.  That would be an important first step towards further CON reform that could save even more money.


Isn’t there a concern that rural residents might leave their counties to go to bigger cities for outpatient surgeries?

Current data shows that residents of rural counties already travel to urban centers for surgeries.  One of the benefits of CON reform would be that outpatient ambulatory surgical centers could be established in counties that might be currently underserved.  Current CON regulations forbid that.


What do insurance companies think about CON reform?

In recent years, Blue Cross Blue Shield North Carolina has run ads highlighting the inconsistency and wide variation between costs for the same medical procedures at the state’s hospitals.  The disparity has surprised legislators and forced a vigorous debate on how to help patients know the hospitals’ costs for surgery procedures so they can work with their doctor to comparison shop before they choose a hospital to have a surgical procedure done.  Because of the savings to patients that should come with CON reform, Blue Cross is supporting CON reform legislation.


How would CON reform affect rural community hospitals who fear that losing profitable services may hurt their ability to care for their communities?

Many rural hospitals are now working in alliance with larger hospital systems in metro areas and using new technologies such as telemedicine to continue to provide quality care for their patients.

How can some hospitals get CON approval to open their own outpatient surgery centers while keeping independent doctor-led clinics from opening?  

There appears to be an advantage for facilities that already have a CON when they come before the SHCC governing board that grants CONs.  Hospitals used to serve the needs of doctors and their patients’ healthcare needs.  Today, with so many doctors being paid by hospitals, that model has changed and hospitals seem to dictate the rules.  Independent, non-hospital employed doctors face an uphill battle as they seek to open outpatient ambulatory surgery centers to save their patients money and give them more choice.


Are there any other side benefits that result from CON reform?

Patients will save on their co-pays. There is a lower risk of infection for outpatient surgery care at ASCs than in hospitals.  Typically, ASCs are more convenient for patients.  Savings for private health insurance patients will be in the hundreds of millions of dollars.  And, CON reform reduces unnecessary costly regulation.


What does the general public think about CON reform?

A March, 2014 Civitas survey showed North Carolina voters supported allowing more independent non-hospital owned same-day surgery centers to be built in the state 65%-19%.  When asked would you be more or less likely to vote for a legislator who voted for a bill that could help reduce the cost of some common outpatient surgeries by up to 60%, reduce the cost for services such as MRIs and CAT scans by about 40% and create more places where you can receive these services, voters said “more likely” 73% compared to 10% “less likely.”