News: CJ Exclusives

CON opponents think they’ll make headway this year against regulations

Rep. Ed Goodwin, R-Chowan, speaks against certificate-of-need laws at a May 15 news conference. (CJ photo by Dan Way)
Rep. Ed Goodwin, R-Chowan, speaks against certificate-of-need laws at a May 15 news conference. (CJ photo by Dan Way)

Legislative opponents of certificate of need laws are confident. This may be the year they prevail against the restrictive health-care regulations.

But opposition from the powerful hospital lobby remains. Hospitals claim competition would hurt their bottom line. It would place hospitals, especially rural ones, at risk of closing, they say. Charity care they must provide also would be jeopardized if newcomers encroached on their profitable services.

Lawmakers, doctors, and academics used a news conference Wednesday, May 15, to say patients would pay less — and state government would reduce Medicaid and State Health Plan costs — if the archaic CON system were abolished.

CON laws require medical providers to get state permission before they can offer many clinical services and buy expensive equipment. Providers must survive a slow and costly review process, creating barriers to entering the health-care market.

With fewer CON restrictions competition would flourish, access to health care would increase, and quality of care would improve, they said. Several proposals would tackle CON’s rules to differing degrees.

State Rep. Ed Goodwin, R-Chowan, said rather than try to repeal CON outright, he wants to chop away CON restrictions. He is a primary sponsor of House Bill 857. It would exempt ambulatory surgery centers and gastrointestinal endoscopy rooms from CON laws.

“I feel really great about this session going forward, and the support we’re getting. I predict there will be large movements in CON laws during this session,” said Sen. Ralph Hise, R-Mitchell. One reason: Many House defenders of CON aren’t in office anymore.

Sens. Joyce Krawiec, R-Forsyth, and Jim Burgin, R-Harnett, joined Hise at the news conference. They sponsored the much broader Senate Bill 646. It exempts from CON review ambulatory surgery centers and endoscopy rooms, operating rooms, diagnostic centers, kidney disease treatment centers, chemical dependency treatment facilities, some home health agencies, and most mental health facilities.

Burgin said S.B. 646 accounts for concerns about charity care. For instance, it would require a new surgery center to allocate a percentage of its surgery revenues to help nearby hospitals pay for uncompensated care.

He is a former member of the State Health Coordinating Council, the bureaucracy that decides CON approvals and rejections.

“The CON was used as a blocking mechanism many times,” Burgin said.

Hise said he was confident hospitals would open more ambulatory surgery centers than anyone else if they are exempted from CON review.

Although they oppose CON reform, hospitals also think many CON regulations are unnecessary and costly, Hise said.

“They just tend to like the areas that make it be a little more profitable for them,” Hise said.

Goodwin said his six-county legislative district has two small hospitals but no walk-in clinics, forcing residents to drive long distances for treatment. He said CON laws interfere with free enterprise, which could ease that shortage.

Matt Mitchell, senior research fellow at George Mason University’s Mercatus Center, said 39% of the U.S. population lives in states with no CON laws. Those states have more hospitals and hospital beds per capita than states enforcing CON laws. Communities can support more hospitals when there are fewer barriers to entry.

In states without CON, residents have greater access to care, more hospice facilities, more ambulatory surgery centers per capita, and more access to diagnostic equipment, Mitchell said. Patients are less likely to go out of state for care, hospital admission rates are lower, survival rates for heart attack and heart failure are better, and racial health care disparities are lower.

Research shows North Carolina would save $213 per person annually on total health-care spending without CON laws, and physician spending would be $73 less per person, Mitchell said.

Dr. Richard Bruch, a Durham orthopedic surgeon, said a North Carolina patient pays roughly twice as much for surgery at a hospital compared to an ambulatory surgery center. In North Carolina, more than 70% of surgeries are same-day procedures, and more than 70% of those are performed in hospital outpatient settings.

Goodwin cited a cost estimator from Blue Cross Blue Shield of North Carolina showing cataract surgery in Wake County costs $2,813 at a physician-owned surgery center, compared to $10,613 at Duke University Medical Center. Similar disparities exist in Columbus County ($2,463 to $7,340), and in Mecklenburg County ($1,643 to $11,871).