Editor’s Note: This story has been updated to include a clarification from NC Blue Cross & Blue Shield. 

Dr. Bruce Schroeder couldn’t give the best treatment to women with breast cancer. State regulations blocked him from buying up-to-date mammogram machines. 

Under certificate-of-need laws, Schroeder had to get state permission before buying the machines. Schroeder couldn’t afford to apply for a CON, so he had to buy refurbished equipment. He even spent tens of thousands of dollars avoiding CON laws — but then 3-D mammogram machines hit the market.

He knew his patients needed them. 

But if he spent more than $500,000 on equipment, he would have to apply for a CON — and endure months of waiting, legal fees, and potential lawsuits from competitors. Critics say the process favors the richest hospital systems and crushes smaller providers’ chances at competing. 

“I was nauseous just thinking about the legal process,” Schroeder, medical director of  Carolina Breast Imaging Specialists, said during a John Locke Foundation Shaftesbury event Monday, Feb.1. “It cost me tens of thousands of dollars to avoid the process. God knows what it would actually cost to go through it. I wanted to put the money into patient care, not checking boxes.”

There is an entire legal industry built up around CON laws, but Schroeder couldn’t pay for a lawyer. He and his wife spent months applying for CON permission, and they got lucky. 

“If we really care about patients, that’s who is affected the most, especially folks in lower-income areas who need care,” said Jordan Roberts, John Locke Foundation government affairs associate. Roberts worked as Locke’s health care policy analyst for 2 1/2 years. “It’s become a corrupt system that’s abused by a lot of folks.”

These laws have restricted patients’ access to care in North Carolina for decades. CON laws aimed to suppress the cost of health care by limiting its supply. But that tactic backfired.

CON laws left North Carolina unprepared for the coronavirus pandemic. CON laws restrict the number of hospital beds, weakening the state on a key measure for economic reopening, James Bailey, assistant professor of economics at Providence College, said during the virtual Shaftesbury event.

States with CON laws have 30% fewer hospitals per capita, 13% fewer hospital beds, 14% longer emergency room wait times, and 3% higher spending, showed a study Bailey conducted for the John Locke Foundation.

“They’ve made it harder to access health care,” Bailey said. “Time matters. Weeks matter, months matter. It’s even crazier now to make hospitals jump through all these hoops if they want to expand.”

The Shaftesbury event included Schroeder, Bailey, Roberts, and Troy Page, Blue Cross Blue Shield N.C. director of network contracting and strategic development. Page said he is open to repealing the CON laws on lower cost sites of care, such as dialysis and ambulatory surgical centers.

“Over the years, we’ve seen big changes with the affordability — or lack thereof — of care,” Page said. “Certainly for the lower cost sites of care, alternatives to hospitals … I think we’re ready to support an immediate repeal of certificate of need.”

Page’s support for repeal is a new development. Lawmakers have pushed to reform CON laws for years, but Blue Cross had previously avoided getting into the debate. 

“We believe it hurts patients, raises costs, erodes wages, makes it harder to provide health care,” Roberts said. “It’s holding back North Carolinians.”