RALEIGH – Opponents of North Carolina’s absurd certificate-of-need regulations need to keep the faith. Admittedly, it continues to be tested by frustrating legislative intransigence and disappointing judicial reticence.
The state supreme court has signaled little willingness to overrule state regulators when the latter cite the certification-of-need law to protect local hospitals from competition. The most recent example came last week when the high court ruled that Harnett County’s Good Hope Hospital could not build a new facility in Lillington to compete with a 50-bed hospital that Harnett Health System is building in the same town.
The story is a bit complicated. Good Hope originally received state permission to replace its aging facility in Erwin, a town in the southeastern part of the county. Later, however, its board realized that relocating to Lillington would maximize the share of the local population that could access its services. The plan drew the opposition of Harnett Health System, which argued that there wasn’t enough potential demand for medical services in the location to justify competing hospitals. Of course, competition requires some excess capacity, what might even be called duplication. Otherwise, consumers could never really make choices among alternatives.
The CON law fails the common sense test. It puts a government agency in Raleigh in the business of deciding which North Carolina health providers can offer a particular service or open a facility in a particular location. That’s a role that no public official should ever be allowed to play, a role inconsistent with freedom or efficiency.
So far, however, policymakers have dutifully protected the interests of large hospitals and physician practices against the interests of patients and lower-cost competitors. Sweet reason has not prevailed over sour grapes. The CON process is, indeed, a con – defended as a public service, but in reality existing as a private benefit to institutions large enough to game it.
As JLF’s Roy Cordato explained a couple of years ago: One sure way to raise the cost of something is to give producers power to restrict output and production. Politicians understand this when the issue is OPEC and oil, but when the issue is health care, they think the way to protect people from higher costs is to restrict the supply of medical facilities and equipment.”
It’s not as though wise North Carolina leaders didn’t foresee a potential conflict between the public interest and service providers whose market shares are sustained by state protections. “Perpetuities and monopolies are contrary to the genius of a free state and shall not be allowed.” That statement is from Article 1, Section 34 of the state constitution. There are few examples more egregious than allowing state government to dictate where North Carolinians can go for medical care.
It’s egregious, but still legal. Let’s have faith that policymakers will eventually see the light, that they’ll have a road-to-Damascus moment. Apparently, it’s not going to be a road-to-Dunn moment.
Hood is president of the John Locke Foundation.