Certificate of need process needs reform
With the need to fix state roads and reduce the inequity in public education, the Legislature may have too much on its agenda to get around to streamlining the certificate of need program.
But, as the endless dispute over who gets to build a hospital in Fort Mill indicates, the program needs to be overhauled.
Discussion of the proposal was sparked by a recent letter from the Federal Trade Commission and the U.S. Department of Justice recommending that South Carolina repeal its certificate of need laws. Gov. Nikki Haley, who supports getting rid of CON, had requested the opinions from the federal agencies.
They said the CON process creates barriers to entry and expansion of health care facilities, and allows existing providers to block competition. The agencies said the process doesn’t help control costs or improve the quality of health care.
York County residents are fully aware of the faults of the CON program. Piedmont Medical Center and Carolinas HealthCare System have been mired in a legal battle to build a Fort Mill hospital for nearly a decade, and the issue has yet to be resolved.
The current rules requiring an extended review process by the state Department of Health and Environmental Control, followed by appeals through the Administrative Law Court, are ridiculously unwieldy. The appeals process regarding the proposed Fort Mill hospital already has dragged on for two years – and counting.
Last year, the full S.C. House passed a bill that would ease the rules on building or expanding hospitals and eliminate the state’s oversight entirely at the start of 2018. The bill, which passed 103-1, would let existing hospitals, medical centers and nursing homes add beds within a mile of their sites.
It also would allow hospitals to expand services that already are approved under the program and remove the need to seek permission to buy costly equipment such as X-ray machines or MRI scanners.
But the bill stalled in the Senate, where its future is uncertain. The Senate’s Medical Affairs subcommittee voted this month to remove the sunset provision that would end state oversight in 2018. But the bill still must clear a number of procedural roadblocks, and it is uncertain when, if ever, it might come up for debate.
We like the idea of streamlining the process, but we could not endorse ending state oversight altogether. There are good reasons not to simply allow the free market to dictate how health care is dispersed in the state.
As officials with the S.C. Hospital Association noted, it’s unfair to apply free-market rules to an industry where up to 60 percent of hospital revenue comes from federal or state sources – and those sources set the prices they pay. The association also fears that eliminating the CON process would end protection for safety-net hospitals that deliver basic health care to thousands in the state.
With no regulation, we likely would see rapid expansion of health care facilities in urban areas and abandonment of rural, less-populated parts of the state. Investors inevitably would rush to build high-profit facilities, such as heart care centers, at the expense of other needs.
We also could see an abundance of shady MRI facilities with low-quality equipment providing inferior or unnecessary services. And nursing homes of questionable quality could sprout up everywhere.
If the Senate does take up this bill, we hope lawmakers will be able to strike a balance between radically changing the process and eliminating it altogether. The state needs to be able to foster competition while ensuring that all parts of the state have access to quality health care.
This story was originally published January 24, 2016 at 11:21 PM with the headline "Certificate of need process needs reform."