Protectionist CON laws and you, the unprotected
by Dr. Jay Singleton
Dr. Singleton is Board Certified in Ophthalmology (scoring in the 95th percentile), and he specializes in cataract surgery, laser cataract surgery, Lasik surgery, glaucoma surgery, blepharoplasty, and treatment of diseases of the eye. He has performed over 20,000 cataract surgeries. His medical practice is located on Trent Road in New Bern, North Carolina.
Dr. Singleton has worked for some time to try to convince the NC General Assembly to eliminate Certificate of Need (CON) laws, and the Coastal Carolina Taxpayers Association’s State Legislative Action Committee is also working toward that end.
I see patients from all over Eastern NC. Many of these patients have just moved here from northern states. When it comes time for surgery, they almost invariably say, “Why can’t you just do my cataract surgery here in your office? Where I’m from, there are outpatient surgery centers everywhere.”
My answer is always the same, “In NC, a mutually beneficial deal has been struck between the large hospitals’ systems and many of our lawmakers to push patients toward higher priced, hospital owned surgery centers.”
The instrument they use to do this is a group of laws called the Certificate of Need laws (CON laws). These laws were enacted by the federal government in the early 1970s to control costs in healthcare by preventing duplication of services. By 1987, CON laws were abandoned because they did not achieve their intended purposes. Unfortunately, North Carolina kept their very strict form of CON laws that even today rank as the third most restrictive in the continental US. This means that nearly all healthcare services are regulated by the DHHS, and a healthcare entity must prove a need exists in their county or region.
This is where it gets interesting. For surgery centers to survive, they must collect a separate fee from insurance companies called a facility fee. This fee is paid in addition to surgical fees to offset the overhead costs of a particular surgery. You must have a CON in NC to collect this fee, and you must prove need, and be unopposed by the hospital system in your region to acquire a CON.
For example, without a facility fee in cataract surgery, a surgeon would make $580 and incur $800 in overhead. In addition, facility fees are variable. Hospitals are given two to three times more fees for the same surgery as a hidden subsidy for loses incurred from the care of uninsured patients (as if being completely tax exempt isn’t enough to off-set that).
In assessing need, the cards are intentionally stacked in favor of hospitals. If one looks at the CONs awarded over the last decade, almost all were awarded to hospitals except those granted to dialysis centers. Each year, the NC State Health Coordinating Council (SHCC) provides a list of “need per region,” and despite our state recently growing to over 9 million residents, the list still showed no increase in need.
If a physician is somehow able to prove need in his or her area in spite of that situation, the friendly local hospital can oppose the project and that runs legal fees up to, on average, something in excess of $400,000.
CON laws are protectionist (of hospitals at the expense of physicians and their patients who could be served more conveniently and at less expense). CON laws are also unconstitutional at their core. Yet the laws’ unfairness and unconstitutionality are flaunted in plain sight. Our state will continue to cling to its special brand of CON laws as long as we keep looking the other way. Keeping silent on the subject will not make them go away; only citizens actively expressing their displeasure to their representatives in the General Assembly can make a difference.