News: CJ Exclusives

CON regime strikes again, rejecting proposed surgery center

Pinehurst Surgical Clinic front entrance. Image from pinehurstsurgical.com
Pinehurst Surgical Clinic front entrance. Image from pinehurstsurgical.com

There are plenty of places to eat in your town. There is no wait to speak of, either. But the local eateries just aren’t that appetizing. The food really isn’t that good; the service, less than ideal. Hence, when desiring a good meal out, you, and many of your neighbors, usually elect to make the drive across the county line to where the offerings are more to your liking. Updated menus, modern kitchens, great service, an experience, and recipes that hit the spot.

A restaurateur in this neighboring county notices just how many patrons are making the trip from out of town. A commitment to service and an eye for opportunity gives the restaurateur an idea: Open another location to serve the market of heretofore traveling patrons where they live. You and your community are excited. Finally, a restaurant worthy of a date night in your own hometown. Soon you won’t have to make that drive across the county line.

Or so you thought.

A state government bureaucracy has stepped in, denying the restaurant’s building permit and squashing your local umami dreams. As it turns out, all new restaurants must get approval from a government council that determines your community’s true dining needs, and they’ve rejected permission for your town’s potential new eatery, citing “a surplus of dining options already available to consumers.” On the council are the owners of those very same ‘dining options’ you painstakingly avoid whenever seeking a good meal. It looks like you’ll have to keep making that trip for date night.

Of course, this wouldn’t happen in the competitive retail restaurant market. For, every Bojangles earns a competing Biscuitville; every Chic-Fil-A, a Popeyes. For you, it means lots of high-quality savory options, at competitive prices, from which to choose in your local market. No long-distance travel necessary.

This sort of thing regularly happens in the market for health care in North Carolina under current Certificate of Need laws. The CON law regulating health care resources in this state has, for decades, placed all authority over new or expanded health care resources —additional beds, new operating rooms, ambulatory care facilities, imaging technology, cutting edge medical equipment — in the hands of appointed bureaucrats, many of whom represent existing providers with which new offerings would compete.

Currently, such a CON scenario is playing out in Lee County, and it’s already a familiar story. Because it is, essentially, the same story from above, except, replacing ‘places to eat’ with ‘places to get surgery on your bad knee.’

Pinehurst Surgical Clinic, in neighboring Moore County, regularly serves Lee County residents who don’t find their local options for elective surgeries, like a knee replacement, as appetizing as those in Moore. Pinehurst Surgical applied for a Certificate of Need to build a new surgery center in Lee, offering all sorts of elective surgeries with the ability of overnight monitoring.

The N.C. Department of Health and Human Services denied the application. In issuing the denial, DHHS cited an existing surplus of operating rooms in Lee County. Yet, locals, patients often avoid those very operating rooms, like those at Central Carolina Hospital, in lieu of alternatives, such as Pinehurst Surgical, in neighboring communities.

The negative effect ripples far beyond health care, says Jim Womack, who served as Lee County Commissioner from 2010 to 2014.

“[Central Carolina Hospital’s] reputation is horrible, and that hurts economic growth and development in Lee County,” Womack, told Carolina Journal. “There are many people here that would like to see to see a new hospital or new options.”

After a successful business career working with info-tech health systems, Womack says suboptimal health care is often a deal-breaker for companies looking for a site, families entertaining relocation, or retirees looking for recreation (and local health resources to keep them on them recreating).

The Pinehurst Surgical application, if approved, would have allowed for the kind of facility that improves upon such health offerings. Being that it was rejected, however, Lee County residents may continue to make the drive, and all those business, families and retirees may continue to drive on by.

“This outcome is the absurd result of North Carolina’s Certificate of Need laws,” says Brian Balfour, senior vice president of research for the John Locke Foundation. “At a time when lack of access to care is a growing concern, the CON law enables state government officials to deny the building of medical care facilities that would provide access to patients in need. This is further proof why North Carolina should scrap all of its CON laws.”

True to form, the bureaucracy that controls who shall and who shall not be allowed to erect or expand health care facilities and resources in North Carolina doesn’t necessarily do so consistently. One hundred miles to the east, Carteret Health Care requested a Certificate of Need to install a second linear accelerator, a very expensive CON-regulated piece of equipment for the treatment of cancer, in 2022. In the eyes of the bureaucracy, the combined populations of Carteret and Craven counties — lumped together due to low populations — failed to warrant such a second accelerator. In this instance, Carteret Health Care was granted an exemption, and approval, after successfully arguing it is a hardship for cancer patients to drive daily out of town for radiation.

Whereas Lee County residents driving to the next county over for shoulder surgery did not quite meet the ‘Need’ threshold, sufficient to allow for a new surgery center, Carteret Health Care did. Notably, Carteret Health Care is a county hospital, which may be treated differently than private physician groups wishing to compete with hospitals by offering communities better care options.

And why not? While competition might be good for consumers, it’s not good for business, giving hospitals and their industry associations plenty of incentive to keep CON laws in place, and Pinehurst Surgical out of Sanford. Exactly, Balfour says, why North Carolina should scrap these laws.

“A free market in health care would empower local medical providers to decide what medical facilities are needed, and where,” says Balfour. “CON laws serve mostly to limit the supply of medical care which reduces patient’s options while driving up costs.”

The legal battles continue, though court decisions frustrate CON opponents.

On Tuesday, Oct. 5, the N.C. Court of Appeals has rejected an attempt to overturn a certificate-of-need decision in Wake County. Appellate judges declined to overstep their authority to try to close a CON “loophole.”

The unanimous decision in Wake Radiology Diagnostic Imaging v. N.C. Department of Health and Human Services means a loss for Wake Radiology. A competitor, the Bone and Joint Surgery Clinic, can keep a state government certificate allowing it to operate a magnetic resonance imaging, or MRI, scanner. Wake Radiology went to court to block Bone and Joint’s CON. Wake Radiology had argued that Bone and Joint had secured its certificate without having to go through the standard CON process.