CONned: How Some Hospitals Keep all the Gold

What is a CON? CON stands for certificate of need which is essentially a legal document given by governing authorities that permits a business owner to open a healthcare facility. Before I write my own thoughts about this topic, I’m going to share information from several articles that explains it all in easy to understand terms.

https://spn.org/blog/certificate-of-need-laws/

“Certificate-of-need laws are regulations that require healthcare providers to get special permission from the government before adding or expanding healthcare services or facilities.”

“In 1974, the federal government passed the National Health Planning and Resources Development Act.”

” The federal government noticed these laws weren’t meeting their intended goals and repealed the CON mandate in 1986.”

“Certificate-of-need laws harm patients and taxpayers, who face higher healthcare costs and fewer options. The Kaiser Family Foundation found states with CON laws had 11 percent higher healthcare costs than states without those laws. A study by the Mercatus Center at George Mason University found the presence of a CON program is associated with 30 percent fewer hospitals per 100,000 residents across the entire state. 

“Certificate-of-need laws seem to have exacerbated the risk of running out of beds during the COVID-19 pandemic. State efforts to relax these rules had little immediate effect on reducing this risk.”:https://www.mercatus.org/publications/healthcare/economics-bed-shortage-certificate-need-regulation-and-hospital-bed

https://youtu.be/oGOhgfsyg_s

In the above video, Jay Singleton, an ophthalmologist and eye surgeon who has been fighting to get his own surgery center for several years, discusses how these laws make it very difficult for him to cover his costs of doing surgery. He is forced to use hospital facilities because he was unable to get approval in the tightly controlled system. Even though he demonstrated that he had the need, they had the power to simply say ‘No’ to his request.

Dr. Singleton has been performing outpatient eye surgery at the Vision Center safely for many years. When he performs such procedures at the Center the total cost is about $1,800. Dr. Singleton would like to offer all of his patients this safe, economical, and convenient option, but he can’t because the CON law strictly limits the number of surgeries he can perform at the center. As a result, he must treat most patients at a hospital that charges a “facility fee” of almost $6,000. 

Why does the law force patients, insurers, and taxpayers to pay thousands more for every procedure? Not to protect public health and safety. If that were the object, the law wouldn’t allow Dr. Singleton to treat any patients at his Center. The law serves one purpose and one purpose only — to protect the large hospital chains from competition by low-cost providers like Dr. Singleton.”

https://www.johnlocke.org/challenging-north-carolinas-pernicious-and-unconstitutional-certificate-of-need-law/

On July 9, Biden signed a wide-ranging executive order aimed at promoting more competition in the American economy by urging federal agencies to crack down on anti-competitive practices in various sectors, including health care.

The order states, “The American promise of a broad and sustained prosperity depends on an open and competitive economy.” For consumers this means “more choices, better service and lower prices.” He’s exactly right. 

Some health policy experts say that the Affordable Care Act has increased prices and led to more hospital mergers, something the president did not acknowledge in his executive order. But it’s surprising that he did not mention that state certificate-of-need (CON) laws are anti-competitive measures that increase the costs of health care services, because they do. 

https://thehill.com/opinion/healthcare/564246-con-laws-limit-the-health-care-competition-that-biden-aims-to-deliver

The Antitrust Division’s experience and expertise has taught us that Certificate of Need laws pose a substantial threat to the proper performance of healthcare markets. Indeed, by their very nature, CON laws create barriers to entry and expansion and thus are anathema to free markets. They undercut consumer choice, weaken markets’ ability to contain healthcare costs, and stifle innovation. We have examined historical and current arguments for CON laws. They do not provide an economic justification for depriving consumers of the benefits of free markets. To the extent non-economic goals are pursued, the use of CON laws to help pursue them imposes substantial costs. Those goals can be better achieved through other mechanisms.

 : MARK J. BOTTI

Chief, Litigation I Section

U.S. Department of Justice, Antitrust Division

https://www.justice.gov/atr/competition-healthcare-and-certificates-need

“Physicians Hugo Ribot Jr. and Malcolm Barfield fought Georgia’s certificate of need law all the way to the state Supreme Court, but the CON won. “Sadly, it wasn’t a question about quality of care, which is higher, or infection rates and costs, both of which are drastically lower,” Ribot says of their denied expansion. “It’s all about lobbying and who’s the strongest lobby, which of course are hospital lobbyists.”” https://www.georgiapolicy.org/2021/05/con-game/

Conclusion

It’s clear that CONs benefit existing hospitals and facilities by preventing new ones from taking their patient dollars. These hospitals are well protected by a medical mafia of sorts in the states that still have them. Between the courts and the hospital lobbyists, the odds of being approved for a new facility are very low. Hospitals will not willingly give up their advantage. Unfortunately. the patients are the ones who suffer by paying higher prices and having fewer beds available during times of crisis, such as the Covid pandemic. This is an issue that needs to go to the Supreme Court. However, as these laws are used to regulate and limit patient choice in healthcare, it is my guess that this is part of a larger plan to create a 100% publicly-funded healthcare system and are unlikely to repealed under a Democrat administration. This was the plan under Trump. While lobbyists and politicians fight over who gets the gold, the patients will continue to pay the price.

3 comments

  1. Good post! We used to have choices here where I live, doctors in private practice, an urgent care, but that’s all gone now. We’ve been totally taken over by a conglomerate, so everyone now works for the hospital. It is definitely a medical mafia.

  2. This is interesting. I didn’t know that CONs existed, and my state, New York, is high on the list.

Leave a Reply