South Carolina Needs a Strong Certificate of Need Law

A major problem with the CON process is the almost inevitable conflict between often logical and appropriate proposals and the concerns of individuals and organizations potentially affected by the decision. These conflicts become political as soon as a local legislator is drawn into the fray and CON decisions are taken out of the hands of the state planning experts, whose job it is to objectively evaluate CON proposals against the established State Health Plan for distribution of health care resources.

Two years ago, the legislature amended the law to improve the approval and appeal processes. After a lengthy review and comment process, the proposed DHEC regulations for implementing the amended law have just been delivered to the General Assembly for approval. Unfortunately, the public and legislators are not yet seeing any improvements from those amended. Frustrated, a bill has been introduced repeal the CON statute.

There is no doubt that CON has a major impact on the cost, quality and access of health care for all citizens of our state. Opponents say the impact is negative, while proponents say that without a CON law costs would go even higher and access to quality care for some people would suffer. It's definitely a complicated and emotional issue in our state.
Opponents of the Certificate of Need process often turn to the “free market” argument to make a case for eliminating CON. After all, America was built on the concept of like business competing on the basis of price, service, quality of product, etc. Doesn’t that make regulating providers of health care services not only counterproductive, but almost un-American?

The answer is no. In fact, it is impossible for hospitals to react like a business in the typical free market because the health care industry is complex and different from any other industry. Consider the following differences.

1. The government sets prices of health care services by deciding what government health programs, such as Medicaid and Medicare, will pay providers.
2. Price is not a factor in most buying decisions. No one prices heart services on the way to the hospital emergency room when they are having a heart attack.
3. The government requires that hospitals provide medical care regardless of the consumer’s ability to pay for it.
4. Consumers usually don’t make buying decisions alone; physicians and payers are almost always involved in the buying decision. 

Many business leaders regard hospital expansions and the proliferation of high-cost technology as a primary reason health care costs are increasing. CON discourages the proliferation of duplicative facilities, services and equipment. While some might argue that deregulating health facility and service expansion will trigger free market forces of supply and demand and lead to lower costs, three major automobile manufacturers— General Motors Corporation, Ford Motor Company, and DaimlerChrysler Corporation (now Daimler AG)—have not found that to be true based on experiences in states that have varying degrees of CON regulation. Independent studies conducted by all three of these multi-state corporations with similar benefit plans consistently found that the costs of health care per person were significantly less in states with CON than in states without CON.

The State CON process is not a perfect one, but the solution is not to abolish it. The solution is to fix what is wrong with the CON process and to address the real reasons that health care costs are out of control. Truth is, without the current CON process, health care costs would be much higher in South Carolina.