Repeal of the Certificate-of-Need

SITUATION: IS THIS SOMETHING THAT CAN BE LEGISLATED?

Identify the problem/concern

The certificate-of-need (CON) legislation in New York should be repealed because there is no substantial proof that it reduces the cost of health care. The law has been applied for over five decades now, and the legislation has not controlled hospital costs or healthcare spending. CON reduces the quality of patient care in healthcare facilities across New York as it deprives people a variety of healthcare choices. 

State your proposal/Idea: 

I propose a law that supports healthy competition in the healthcare industry by restricting over consolidation in the competition, prohibit price caps (which are a barrier to innovation) and enforce antitrust laws to ensure healthy competition. 

BACKGROUND: DO YOUR RESEARCH

Include studies, reports, personal experience, or anecdotal stories related to your proposal: 

The main reason that has made me consider the repeal of CON is that I always had issues with the rigorous process that one had to undergo before they get approval for bringing in new technology, how the legislation hinders innovation and how it compromises the quality of patient’s care. Also, I have heard several states that have already repealed the legislation or are in the process of repealing it. I took it upon myself to carry out research so as to identify the underlying facts in CON. One of the instances that show the ineffectiveness of CON is the case of a doctor from Northern Virginia who in 2003 sought to introduce a second MRI machine to his facility; it took the doctor five years to do so and over $175,000 in legal and other fees (Schencker, 2016).

    Research carried out by Conover & Sloan (1998) on the impact of removing certificate-of-need from the healthcare sector, it concluded that the cost containing influence of CON is minimal. The study also found that there was no sufficient evidence to suggest that the removal of CON would result to surge in the acquisition of healthcare facilities or increase in healthcare costs. CON neither has a significant positive impact nor significant adverse impact on the quality of healthcare. 

     There are fears that if CON in New York is repealed then, there will be increased Medicaid nursing home expenditures; this is far from the truth. There is a conventional wisdom that CON has managed to restrict the number of beds in healthcare facilities, therefore reducing Medicaid costs. Grabowski, Ohsfeldt, & Morrisey (2003) drew a link between CON and Medicaid expenditures to dispute the conventional wisdom. The authors stipulate that there is no direct connection between CON and Medicaid costs; therefore, there needs to be a series of links: “CON must hold down the number of nursing home beds within a market. Next, fewer beds must translate into fewer Medicaid recipients within nursing homes. And finally, fewer Medicaid recipients in nursing homes must translate into lower total Medicaid expenditures.” The legislators and people of New York shouldn’t fear about the rising costs of Medicaid upon repealing CON.

     CON has failed to live up to its intention of controlling healthcare costs, and it is time to repeal it all together. More so, instead of the law being used for its original intentions, it is now used to monopolize particular healthcare services that make it harder for other competent physicians or facilities to implement these services. Some of the services that have been difficult to start include freestanding radiology practices and ambulatory surgery centers. In authorizing competition, there will be high-quality and low-cost services in the healthcare industry, making it even affordable for those who do not have healthcare insurance plans. 

Has there been similar legislation introduced and passed in other states? If so, include it

     New York was the first state in the United States to introduce certificate-of-need i.e. in 1964. Till then, there has been no significant impact of the program on the healthcare costs especially to residents of New York, who are medically indigent. A study by Stratmann & Russ (2014) concluded that without the desire to increase indigent care, CON increases the cost of health for indigents because of the restricted number of beds and machines. Some states realized the reality on CON and decided to retire the legislation; they include; Wyoming, Texas, Utah, North Dakota, Indiana, Pennsylvania, Colorado, California, Idaho, Arizona, South Dakota, New Mexico and Minnesota. In these states, they have allowed competition through regulation. Indigent care can be promoted by allowing competition and passing legislation that authorizes “physician-owned facilities to accept a pro-rata share of indigent care, increase Medicaid rolls and impose taxes” (Inman, 2011).

ASSESSMENT: FINANCES AND STAKEHOLDERS

Identify financial impact if any: 

The greatest financial impact will be on indigent care where those who are not covered and those who are covered will access quality and affordable care due to the increase in competition. Lowering the barriers to entry and competition will ease the overall healthcare costs due to the increase in the supply of services in the healthcare market.

 

Identify Stakeholder group that will support this bill: 

    The bill will receive support from different quarters that have shown interest in repealing CON. Upcoming physicians have always found it difficult to either start their facilities or expand their facilities even though they have the capacity. Apart from the physicians, residents of New York who are considered indigent will support this bill knowing very well that any competitive market brings down the price and ensures quality. The Justice Department and Federal Trade Commission (FTC) have always been against CON, and they support either reforms or repeal of the laws. 

Identify the people/group who will oppose the bill

    The biggest threat to this bill is the established healthcare companies and large hospitals who know that upon the repeal of CON; there will be an increase in the number of entrants in the market which will push their prices down, and this will affect their exorbitant profits. Some of these institutions fear that many players in the market will push their break-even points of their large investments. 

RECOMMENDATION

Make an appointment with your legislator to discuss your proposal: 

At this moment, I seek a meeting with you, Aileen Gunther, as a member of the New York State Assembly, a New York health legislative committee member, and as a person who has experience in healthcare. The aim of the meeting is to discuss the matter on repealing the certificate-of-need legislation and developing a bill that promotes healthy competition in the health sector that will reduce the cost of healthcare, improve quality and improve indigent care in New York State.

 

Leave a Reply