The repeal of North Carolina’s Certificate of Need (CON) Law has the potential to drive costs up within the state’s health system while taking millions of dollars away from Sampson Regional Medical Center, potentially leaving the most vulnerable patients at risk, a “devastating impact on our hospital and community,” Sampson Regional officials said.
Earlier this week, the Sampson Regional Medical Center’s Board of Trustees adopted a resolution firmly opposing changes to service lines covered by Certificate of Need and the revocation of Certificate of Need under current proposed legislation.
“Repeal of Certificate of Need will allow for unfair or inequitable competition by for-profit entities that would undercut rural hospitals by strategically locating themselves to draw business across county and state lines, thus devastating the viability of rural hospitals,” the resolution states in part.
The approved document was sent to the N.C. House and Senate representatives, imploring support of rural hospitals. Officials with the North Carolina Hospital Association, advocates for Sampson Regional and others, believe this General Assembly session will adjourn for the summer without a vote on CON Law repeal. The Legislature will not reconvene until January 2017.
In essence, the CON law prohibits health care providers from acquiring, replacing or adding to their facilities and equipment, except in specified circumstances, without the prior approval of the Department of Health and Human Services. Prior approval is also required for the initiation of certain medical services. The law restricts unnecessary increases in health care costs and limits unnecessary health services and facilities based on geographic, demographic and economic considerations.
Generally, a CON must be obtained for new facility beds, facility development, and improvements costing more than $2 million, as well as medical equipment costing more than $750,000. A variety of services are covered by CON law, including acute care hospitals, nursing homes, home health agencies, diagnostic centers, hospice facilities, ambulatory surgical facilities and long-term care hospitals.
The fundamental premise of the CON law is that increasing health care costs may be controlled by governmental restrictions on the unnecessary duplication of medical facilities. To accomplish its purpose, the CON law provides that “no person shall offer or develop a new institutional health service without first obtaining a certificate of need.”
The proposed measure in the N.C. General Assembly would eliminate in early 2021 the requirement that state health regulators sign off on any “new institutional health service.” The certificate is designed as a way to ensure the orderly distribution of health care statewide based on population and to encourage services in rural areas. At least 14 states have discontinued their programs since a federal mandate for having such rules ended in the 1980s.
Repeal proponents said North Carolina’s program has led to higher medical costs for patients by blocking competition and has required rural residents to travel out of their home counties for specialized services. A more market-based system would control expenses and more quickly align services with a local population’s needs, improving competition along the way, they say.
N.C. Hospital Association representatives said certificate of need preserves what little stability there is to a health care system in North Carolina facing changes from an approaching state Medicaid overhaul, the 2010 federal health care law and other mandates.
“For-profit healthcare entities’ missions are profit focused, rather than attentive to caring for the unprofitable, indigent and Medicaid patients currently served by Sampson Regional Medical Center,” the board’s resolution states.
The repeal of CON would jeopardize the ability to continue caring for those indigent patients and lead to greater financial burden if commercially-insured patients at the hospital — they make up about 25 percent — are lost to competing, for-profit centers.
Durham-based Ascendient Health, one of the top 50 healthcare consulting firms in the country, completed a report last year that analyzed the debate over CON laws.
“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,” the report concluded.
Rural hospitals like Sampson Regional would be forced to eliminate services that are not profitable, “further complicating healthcare access and transportation problems for patients who must go elsewhere for services but who are least capable of traveling due to disabilities or financial constraints,” the resolution reads.
The resolution was signed by Dr. Shawn Howerton, chief executive and medical officer for Sampson Regional, and Curtis Barwick, chairman of Sampson Regional’s Board of Trustees
Reach Managing Editor Chris Berendt at 910-249-4616. Follow the paper on twitter @SampsonInd and like us on Facebook.