First, Do No Harm: Analyzing the Certificate of Need Debate in North Carolina

From time to time the Parker Poe Health Care Blog will be asking experts in the health care field to serve as guest bloggers. Our first guest blogger is Daniel Carter from Ascendient. Ascendient is a Health Care Consulting firm located in Chapel Hill, North Carolina, that provides strategic health care planning and Certificate of Need advice and analysis. Ascendient has recently completed an in-depth analysis of the Certificate of Need (“CON”) law in North Carolina to determine how a potential repeal of the law would affect health care providers and consumers in the state. After reading it, we decided we should share this analysis with you. Here is a summary with a link to the full report.

Much of the debate over whether North Carolina’s Certificate of Need (“CON”) law should be repealed has focused on market theories without a great deal of focus on measurable realities. Ascendient decided to expand the perspective beyond the ideological arguments and review the data to see if it could draw some conclusions about how a potential repeal of the CON law in North Carolina would affect health care providers and consumers.

Based on an analysis of facts and objective data, we conclude that any move now to deregulate North Carolina’s healthcare system by reducing or eliminating the CON program would be premature and put already vulnerable hospitals at much greater risk as new entrants pick off their best patients without taking up the burden of indigent care.

Among our key findings:

• CON regulations have not restricted the development of Ambulatory Surgery Centers (ASCs) in North Carolina.

There are 44 ambulatory surgery centers in the state today—just three more than in 1996. But CON cannot be blamed, as the state’s regulatory agencies authorized 72 unique ASCs over the last 20 years, proving that market forces—not regulations—are limiting growth.

North Carolina residents have ready access to regulated healthcare services.

Based on current utilization, there is no evidence that North Carolinians are going without needed care. The additional hospital bed, MRI, or ambulatory surgery operating room capacity suggested by anti-CON advocates would be expensive and unnecessary. Economic disparities—not capacity deficits—drive access issues; there is no incentive to compete for uninsured patients.

States with CON show greater access to hospital care for the uninsured.

The vast majority of patients in financial need do not need ambulatory surgery. The poor and underserved seek care at emergency rooms, delivery rooms, and primary care physician offices. House Bill 200’s charity care requirements will not address these patients.

Cost comparisons between CON and non-CON states are muddy at best and cannot be used to argue conclusively for or against CON.

Among the 36 states with CON laws, there are huge variations in enforcement, timing, triggering levels, political goals and the number of services regulated by CON. There is no statistically significant price difference—inpatient/outpatient adjusted price per patient discharge—between heavily regulated CON states and non-CON states.

Higher healthcare spending in CON states is likely driven by differences in population health.

Heavily regulated CON states have a statistically significant higher rate of disease—such as cancer, COPD, and cardiovascular—than non-CON states.

Competition is not the solution for all the problems with American healthcare.

The Bush-era FTC/DOJ report (2004) is cited often as a justification for reconsideration of CON programs, but it also concluded that increased competition would only succeed in conjunction with new payment methods to align provider incentives with patient interests.

Conclusion

While we should all be concerned about the cost of healthcare, a close reading of the data reveals that eliminating CON will likely do little to control healthcare costs and has the potential to harm hospitals and limit access to quality health care state-wide.

For a more detail review of the data, providers please read the Ascendient’s full report by clicking here.

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