Little-known Laws Amplifying our Struggle with the Delta Variant

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As the Delta variant surges across the country, Hawaii has run into a dire problem: A shortage of hospital beds, which could force providers to ration care. 

How did the state wind up in this predicament? It’s not as if the United States is incapable of increasing hospital capacity. We have no shortage of ready-and-able entrepreneurs.

The problem is, in part, Hawaii’s certificate-of-need laws. “The biggest reason Hawaii doesn’t have enough beds is that certificate-of-need requirement,” said Joseph Pluta, president of the West Maui Improvement Foundation. “It’s a self-inflicted problem.”

Hawaii isn’t alone. Most states enforce CON or similar restrictions which require health care providers to get government approval before opening or expanding a facility, adding imaging devices and other medical technology, or offering new services. While Hawaii’s may be strictest of all, CON laws hurt patients wherever they are in place. 

Americans for Prosperity Foundation recently did an in-depth study on the effects of CON laws in four states: South Carolina, Iowa, Michigan, and Virginia. In each state, CON raises costs, reduces access to care, and promotes cronyism of the ugliest sort.

Say that a hospital wants to open a new wing with 60 new beds and a couple MRI machines. Under a CON regime, it must first seek approval from a CON board, an often expensive and time-consuming process. In Iowa, the cost of each application usually runs the provider about $16,000 in fees, according to AFPF’s report. Instead of patient demand deciding when there’s a need for new hospital beds, the decision is instead relegated to a slow, cumbersome, and bureaucratic process.

In South Carolina, the time between the submission of the application and the decision takes, on average, 148 days, but contested cases can take over a decade.

As if that wasn’t enough, CON boards typically allow competing providers to submit an objection to the application. They often do, of course, because few providers want their competitors to muscle in on their territory — even if expansion is better for patients. The COVID-19 pandemic has revealed a dark truth: CON laws protect existing health care providers from competition, hurting patients in the process.

In 2017, the Wendt Cancer Center in Iowa blocked the opening of a proposed radiation therapy center on the grounds that it would put Wendt out of business. But when the new radiation center finally got approved thanks to overwhelming community support, Wendt not only kept its doors open – it merged with another center and invested in a $2.2 million patient experience upgrade.

The CON review process in South Carolina has often proved so oppressive that even the state Supreme Court had to weigh in, recognizing in 2018 that it had been 12 years since the South Carolina Department of Health and Environmental Control determined that an acute-care hospital in York County was necessary.   

As ridiculous as the CON approval process can be, it can also have deadly consequences. Virginia’s State Health Commissioner twice denied an application by Salem’s LewisGale Medical Center to build a neonatal intensive care unit, based on a recommendation from the state’s CON board claiming that there was no pressing need for another NICU in the area.

The board informed them that Carilion Medical Center, six miles away, already had one.

But only months later, a pregnant woman lost her child because the hospital with the NICU could not send a specialized transport to help her. It was on call, miles away on the opposite side of the service area.

It’s becoming increasingly clear to Americans that CON restrictions only produce disaster. The federal government enforced its own CON laws in 1974, only to repeal them in 1986 when Congress found that they were ineffective and deadly.

When the pandemic struck, 20 states opted to suspend their CON restrictions by emergency executive order almost immediately. They predicted, wisely, that CON restrictions would only hurt the ability of providers to treat patients. 

Some states, including Tennessee and Montana, permanently repealed some of their CON restrictions through legislation. Their actions are backed by numerous studies, which point to CON making quality, affordable care less accessible.  

With the Delta variant still spreading, and hospital capacity dwindling, perhaps these states will take additional notice of their CON restrictions, and how they’re hurting patients.

Eric Bolinder is managing policy counsel for Americans for Prosperity Foundation. 

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