CON, A Discussion That Needs To Take Place.

Jessica linked to it in the Morning Reads and this was in this morning’s Peach Pundit Daily:

The Coming Battle Over Certificate Of Need. – Two Cartersville ob/gyns filed suit Tuesday to overturn the state’s health care regulatory process, saying it restricts competition and is unconstitutional. Drs. Hugo Ribot and Malcolm Barfield are challenging the Georgia Certificate of Need program, a complex set of regulations governing the creation and expansion of medical facilities. The Certificate of Need process has long been controversial because hospitals often use it to challenge competitors’ proposed projects. It has also pitted doctors against hospitals in battles over building surgery centers. The physicians’ lawsuit, filed in Fulton County Superior Court, is believed to be the first such litigation seeking to overturn the state’s entire Certificate of Need, or CON, program, said Glenn Delk, an Atlanta attorney for the physicians. This is one to watch.

According to the Department of Community Health website:

The Certificate of Need (CON) program is intended to achieve three goals: (1) to measure and define need, (2) to control costs, and (3) to guarantee access to healthcare services. Georgia began reviewing health care projects in 1975 under Section 1122 of the 1972 Social Security Act Amendments and Georgia’s CON program was established by the General Assembly in 1979 (O.C.G.A. Title 31, Chapter 6).

A report by the Mercatus Center takes a different view:

While CON programs were intended to limit the supply of health care services within a state, proponents claim that the limits were necessary to either control costs or increase the amount of charity care being provided. However, 40 years of evidence demonstrate that these programs do not achieve their intended outcomes, but rather decrease the supply and availability of health care services by limiting entry and competition. For policymakers in Georgia, this situation presents an opportunity to reverse course and open the market for greater entry, more competition, and ultimately more options for those seeking care.

Hopefully this lawsuit will encourage a discussion about Certificate of Need and whether or not changes to the system are needed. I would suggest changes are needed. Of course, if the Doctors win, change will come.

14 comments

  1. xdog says:

    Of course the CONs are anti-competitive in that they are designed to direct revenue to a preferred location. Whether that rises to the level of unconstitutional conduct or whether sufficient mitigation exists to keep current rules intact I can’t say.

    But there’s more going on, based on my own experiences. A few years ago I had out-patient surgery scheduled at an O/R located at my doctor’s office. My insurance refused to cover the procedure unless I had it performed at a local hospital. I never found out why they made that call. They didn’t object to my doctor. He drove up the road and used the hospital’s facilities instead of his own. It could have been expense but I doubt it. It would have been hard for the private clinic to beat the show the hospital put on in terms of elaborate facilities and number of people involved.

    • Thanks for posting that.

      We have to deal with access to care around the state, especially in rural areas. Does our present CON system help or harm rural areas? I’m not sure. But making it harder to private clinics to compete with hospitals probably doesn’t help rural areas whose hospital closed or there wasn’t one close by to begin with.

  2. Raleigh says:

    I hope these guys win. How can limiting competition help anything? All I have ever seen from this law is the factory style Mega Hospitals use it to save themselves from having to compete. This law is just plain wrong.

  3. objective says:

    i’m not sure if i buy into DCH’s #2 and #3 explanations above., as CoN doesn’t do either. it’s designed not to control health care costs, but costs of competition. so it’s more of a revenue protection program. while some might want to say that such protection encourages the development of facilities in underserved areas, basic profit motive can do that. with the landscape of healthcare services changing so rapidly, technology and all, the system needs to evolve to encourage more dynamic and cost-efficient service modes. and in addition to limiting supply, there’s a lot of waste in administering the CoN program.
    but i would rather the court case decide the issue rather than a battle between hospital lobbyists and possible doctors’ lobby.

  4. Charlie says:

    Let’s be honest about what’s going on here. This lawsuit is about allowing for profit entities like boutique hospitals (**cough** Cancer Treatment Centers Of America **cough**) and highly profitable specialists (MRI centers, etc) to operate on the overhead of an 8-5 M-F facility that only accept paying (pre-paid/insured) patients.

    Hospitals have to serve both an indigent public (see Monday’s column for that losing proposition) and anyone that shows up in need of care for any condition that “may” be life threatening.

    This is about allowing the profitable customers to be siphoned off from the currently highly regulated system. That’s not “free market”, that’s special rules for some, and “it sucks to be you” for others.

    If you want to start killing off hospitals even faster than we currently are, then by all means, scream “free market” very loudly while you proceed without having any understanding as to how this un-market is interconnected.

    • Well, I wasn’t screaming “free market” I was a) making note of a lawsuit that could have rather dramatic implications for Georgia and b) suggesting that taking a look at, and perhaps modifying our Certificate of Need system, as many other states have done over the years, might help address some of the problems we’re facing.

    • objective says:

      you’re right about this aspect of the problem. which i see as entangled with demand-side effects arising from the insurance market. the unfortunate part is that there is as yet no politically accepted solutions to compensate hospitals for their compliance with the mandate to serve the un- or under-insured. obv, Medicaid expansion is out….

    • SallyForth says:

      Charlie, you are SO on target! You just described the exact reason Georgia’s CON law came into existence in the first place. For-profit docs were buying expensive pieces of equipment, setting up and operating in areas of direct competition with non-profit public hospitals, cherry picking the populace, pocketing the big bucks – and sticking it to we, the taxpayers who pay to keep the public hospitals open to serve ALL the people, including indigents who are sent there by for-profits.

      That’s not free market — that’s hunting over a baited field.

  5. saltycracker says:

    Charlie got to the meat: a free aka competitive market plays by the same rules/regulations for all and tosses in a few rules to keep one guy from crushing the other. The suit is all about gaining an advantage and the CON is about not getting crushed by a mandate to provide.

    mandate individual insurance for all, subsidize some – failure to let the working healthy fly under the insurance radar is nuts or let the hospitals deny service beyond stabilization.

  6. The Comma Guy says:

    Coweta County has an empty hospital building. US HealthVest wants to take over the building at turn it into a mental health/behavioral hospital. Tanner Health Systems, located in Villa Rica, argued against it and the DCH denied the CON Vest sought. Tanner claimed that from Villa Rica it served the mental health needs of folks all the way to Fayette County.

    Vest filed suit and a Superior Court Judge in Coweta County recently held that “the DCH’s standards for acute inpatient psychiatric and substance abuse services were ‘unconstitutionally vague’ and in violation of the State Health Planning and Development Act.” About the same time as the judge issued his ruling, Tanner announced that it was shutting down its facility for an indeterminate amount of time. Staff have been reassigned and there is no timetable for the facility to re-open.

    Even though they do not provide services, Tanner and the DCH have now filed an appeal to the Superior Court’s ruing: http://www.times-herald.com/local/20150710-NBH-faces-final-appeal-12-inches-no-art

    One of the things noted in the story is that a few years ago, the DCH had approved a CON for a psychiatric hospital to be built. Even though nothing has changed in terms of resources since 2007 and the population has grown, the DCH doesn’t find that there is a need now.

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