Patients deserve better access to both life-saving and life-preserving health-care treatments. Which means physicians, hospitals, and other health care facilities should be able to invest in their communities to address unmet patient demand for critical services such as kidney dialysis units, cost-effective surgery, neonatal intensive care units, nursing homes, and much, much, more. Unfortunately, providers in North Carolina and 35 other states can’t embark on any plans to expand patient care unless the state has determined for itself that there is a “need.” And even if the state does grant a certificate of need (CON) to a winning applicant, competitors can step in to delay any capital projects from moving forward.
Wednesday’s op-ed in the Wall Street Journal explains:
In Cartersville, Ga., two highly regarded obstetricians, Hugo Ribot and Malcolm Barfield, hoped to add a second room to their one-room surgery center. But the plan hit a snag. They needed to obtain a “certificate of need” from Georgia’s Department of Community Health. Three large hospitals in the area — which provide similar services at far higher cost — blocked their application. Dr. Ribot and Dr. Barfield are now suing the state for restraint of trade.
The CON regulatory process was originally designed for state health planners to slow the growth of rising health care costs by preventing an over-investment of underused facilities and ensuring equitable distribution of health care resources across the state. However, decades-old data show that CON law has not contained health care costs. Nor does the law preserve health care in rural areas. According to the Mercatus Center, CON states have 30 percent fewer rural hospitals and 13 percent fewer rural ambulatory surgery centers compared to states without CON laws. As mentioned in the Wall Street Journal and numerous other publications, this regulation has instead evolved into a protectionist policy for established providers. Who wouldn’t leverage a law to their advantage that stalls competition?
Because of CON, patients continue to pay higher out-of-pocket costs for certain treatments, or are forced to travel longer distances to fulfill their health-care needs.
The good news, however, is that North Carolina’s CON law could very well be nearing its end. The Senate’s budget proposal calls for a complete phase-out of the 25 services and facilities that are limited by the Department of Health and Human Services by 2025. You can read more of the details on this in my previous health care update here.
While full CON repeal is nowhere to be found in the House budget, it should be noted that both chambers will continue to exempt rural hospitals from the CON process if they are awarded grant money from the Dorothea Dix Hospital Property Fund for purposes of adding or converting unused acute care beds into inpatient behavioral health beds. The exemption aligns with the mission of the state’s Task Force on Mental Health and Substance Abuse to expedite treatment for psychiatric and substance abuse needs. In the upcoming fiscal year, the Senate proposes to allocate another $8 million for mental health services to rural hospitals. Meanwhile, the House plans to distribute $19 million to the following organizations:
- $4 million to Caldwell/University of North Carolina Health Care
- $4 million to Cape Fear Valley Medical Center
- $4 million to Vidant Health
- $3 million to Good Hope Hospital
- $2.2 million to Mission Health System, Inc.
- $1.8 million to Dix Crisis Intervention Center
In determining what regions of the state are in “need” of behavioral health resources, the Department of Health and Human Services chose the top 15 counties where patients must travel more than 100 miles for necessary treatment. Ideally, hospitals and health centers should be able to decide for themselves how to go about providing these resources — not the state. Yet eliminating CON review in this case is an important victory for patients.
The ability for Dorothea Dix grant recipients to bypass CON was enacted last year. This week’s news announced some of the first grantees to receive seed money for providing sustainable mental health resources. Franklin Regional Medical Center, a hospital that will soon reopen under the management of Duke Lifepoint, has been awarded $10 million to convert 33 acute care beds into inpatient psychiatric adult beds. Charles A Canon. Jr Memorial hospital in Linville will receive $6.5 million for the conversion of 27 unused acute care beds into adult inpatient psychiatric beds.
Eliminating CON under this initiative certainly makes for sound policy. Imagine if all hospitals could provide inpatient behavioral health beds without having to slog through the CON rigmarole. Imagine if all hospitals didn’t need to prove to DHHS why they need to acquire another MRI machine, or update other major medical equipment. Imagine if all physicians had the freedom to install cutting edge diagnostic equipment in their own offices. The list goes on…
As final budget negotiations take place over the next couple of weeks, let’s hope that the legislature seizes an opportunity to do away with an outdated law that fails to act in the best interest of patients.