NC’s hyper-regulated health care

Only New Jersey, Hawaii, DC, and Vermont slap more red-tape on their health care providers than North Carolina does.  THAT information comes from a recent study by The Mercatus Center at Virginia’s George Mason University: red-tape-image

In the summer of 2016, New Hampshire became the 15th state to repeal its “certificate-of-need” (CON) program. This means that 35 states and the District of Columbia currently prohibit entry or expansion of healthcare facilities through CON programs. These laws, which require government permission before a facility can expand, offer a new service, or purchase certain pieces of equipment, were enacted in the belief that they would achieve several goals. 

  1. Ensure an adequate supply of health resources
  2. Ensure rural community access to care
  3. Increase the quality of care
  4. Ensure the provision of charity care to those unable to pay and for other underserved communities
  5. Encourage the use of hospital substitutes such as ambulatory surgery center (ASCs)
  6.  Restrain the cost of care

Forty years of peer-reviewed academic research—including the latest studies by researchers at the Mercatus Center at George Mason University—suggests that CON laws have not only failed to achieve their goals but have in many cases led to the opposite of what those who enacted the laws intended. 

Consider, for example, the stated aim of CON laws of increasing the supply of healthcare services. GMU professor and Mercatus Center scholar Thomas Stratmann and his coauthor Jake Russ found that CON is associated with a more limited supply of hospital beds and medical imaging equipment. In related research, Stratmann and PhD student Matthew C. Baker found that CON is associated with less utilization of medical imaging equipment among nonhospital providers. ggg

Or consider the goal of increasing rural access to care. Stratmann and Mercatus Center research fellow Christopher Koopman found that CON is associated with fewer, not more, rural hospitals.

Though policymakers didn’t originally intend CON as a quality-enhancing regulation, many advocates now contend that it might increase quality by channeling more procedures through fewer hospitals, allowing those hospitals to gain expertise. In research with Mercatus MA fellow David Wille, however, Professor Stratmann finds that CON regulation is associated with lower, not higher, quality, as measured along multiple dimensions.[…]

What this CON nonsense boils down to is making a business obtain government permission to change its business plan so as to better serve its customers. 

biggovtThere are a total of 25 different services North Carolina requires a health care provider to seek state permission for before introducing it into a market: acute hospital beds, burn care, cardiac catheterization, ambulatory surgery, Gamma knives, Home health, linear accelerator radiology, intermediate care facilities / mental retardation,  lithotripsy, long term acute care, nursing home beds, mobile hi tech, MRI, neo-natal intensive care, open heart surgery, organ transplants, PET scans, psychiatric services, radiation therapy, rehabilitation, dialysis, assisted living facilities, subacute services, and substance abuse treatment. 

We’re not talking here about regulating it all for quality or safety.  We’re talking about having to convince bureaucrats that you need to do it to serve your customers. The system is quite the smorgasbord for lawyers because all of these CON applications get challenged by the applicants’ competitors.  Instead of good old fashioned competition, you can get the state to hamstring your competitors before they even get out of the starting gate.

Politicians and bureacrats love this system because it puts them in a position of being able to (1) do “favors” or (2) lord over someone else. In the meantime, we out here in the real world suffer from a lack of local resources, a lack of choices, and government-inspired, artificially-inflated health care costs.