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Certificate of Need may be on the chopping block, again.

Carolina Journal | March 16, 2017

Sen. Ralph Hise doesn’t take no for an answer.

The Mitchell County Republican was close last year but unsuccessful pushing a bill to eliminate the state’s archaic certificate-of-need system, which limits competition in health care through tight restrictions. He vowed to take another whack at the sweeping reform. Last week he introduced Senate Bill 324 to do just that.

“This should end all CON as it exists effective on passage,” said Hise, co-chairman of both the Senate committees on health care, and appropriations for health and human services.

“I definitely have more support for it than I did last year,” Hise said.

In conversations with House counterparts and medical provider stakeholders, “I have yet to find any that tell me the future of health care is government agencies determining the amount of health care services we can receive,” Hise said. Even the state Department of Health and Human Services, which administers CON oversight, has cut 86 CON rules.

But longstanding foes of reform are resisting.

“Oh sure, particularly the hospitals, long-term care facilities, those kind of things. There’s some kind of immediate pushback, but we’ve been down that road before,” said Hise, who was joined by Sen. Trudy Wade, R-Guilford, as a primary sponsor.

One difference with this CON abolition is that it does not set a deadline for the law to end. Hise said he is considering a phased-in schedule letting affected providers and industries have enough time to recoup their investments.

Hise acknowledged entrenched interests would resist full repeal. An alternative scenario could allow more providers to compete in areas now restricted by CON so that eventual repeal is possible. 

Another fallback position might be to exempt select areas, as happened last year when allowing the former Franklin Regional Medical Center in Louisburg to reopen withpsychiatric inpatient beds that didn’t need CON approval.

Two other bills abolishing specific CON laws were introduced last week.

Senate Bill 330 sponsored by Senate Majority Leader Harry Brown, R-Onslow, would exempt hospice inpatient facilities from CON regulations.

Senate Bill 349 sponsored by Sen. Tommy Tucker, R-Union, would exempt ophthalmologists from CON mandates so they could perform some eye surgeries in a surgical procedure room.

The Mercatus Center at George Mason University has done groundbreaking research on the negative effects of CON regulations on health care in North Carolina and other states. One study found higher death rates in several categories. Another found that, without CON laws, states would have more facilities, patient beds, and high-end diagnostic equipment.

Matthew Mitchell, a senior research fellow at Mercatus who has examined CON issues, said those laws restrict supply, “which economic theory tells us, and 40 years of data now confirm, is likely to limit access to care, diminish the quality of care, and increase the price of services.”

Barring newcomers from the health-care market explains why regulated industries tend to prefer CON, Mitchell said. Economists and antitrust authorities in the U.S. Department of Justice and Federal Trade Commission “have had a longstanding position that certificate of need unnecessarily cartelizes industries to the detriment of consumers and taxpayers.”

Mitchell said creating those cartels can help the wealthy and well-connected at the expense of the powerless. 

“I would think both liberals and conservatives could coalesce around that.”

Indeed, Brown’s hospice bill has bipartisan support. Sen. Gladys Robinson, D-Guilford, is one of two Democrats who signed on. The other is Sen. Valerie Foushee, D-Orange. Sens. Bill Cook, R-Beaufort, Norman Sanderson, R-Pamlico, and Louis Pate, R-Wayne, also are co-sponsors.

Robinson said she has worked with hospice-care administrators in Greensboro, and has had friends and constituents who used its services.

“I know that it is important that we have capacity within those facilities, facilities like the one in Greensboro, and across the state so that loved ones can be properly taken care of,” Robinson said. “We should not have a limit on the beds that are available to take care of patients during those latter stages of life.”

But Linton Cooper, vice president of Transitions Life Care (formerly Hospice of Wake County), believes repealing CON regulations for inpatient hospice is bad public policy.

“The utilization of inpatient hospice beds has actually been declining across North Carolina, and that is reflective of the data across the United States,” said Cooper, also board chairman of the Association for Home and Hospice Care of North Carolina.

“Additionally, there is a process to request a CON certain special needs determination, and there are very few people who are asking for additional beds to be placed in their counties, which suggests that people already have excess capacity,” Cooper said.

Additional inpatient hospice bed allocations are available in Cumberland County, yet no applications have been submitted, he said.

“So when you have opportunities to build facilities, and no one is applying for them, that doesn’t suggest that there’s an unmet demand,” Cooper said.

Katherine Restrepo, director of health care policy at the John Locke Foundation, disagrees.

Health-care facilities and medical entrepreneurs, not the state, “should assess on their own terms whether there is in fact a market demand for medical services and facilities they wish to expand or construct to provide health care for patients in their communities,” Restrepo said.  

The state process to allot certificates “is largely outdated and contains loopholes, which create an unequal playing field” for select entities to offer more medical services or build new health care facilities in their local communities, she said.  

Restrepo said CON laws are a way for the status quo to keep out competition. “Who wouldn’t use that to their advantage?”