Competition has long been proven to improve services, lower prices, and give consumers more choices, but despite the success of the free market, Georgia has decided to restrict competition in its health care industry. Georgia is one of 36 states that limit the ability of health care providers to expand their businesses by mandating an approval process known as a certificate of need. The system gives current suppliers of health care services an unfair advantage and keeps out new entrants into the marketplace.
Certificate of need (CON) laws were first passed in the 1960s by states seeking to slow increasing health care prices by limiting duplication and promoting health care consolidation. CON laws require health care providers seeking to undergo certain types of expansion to receive state approval, generally from the state’s health care agency or a designated commission.
Georgia requires approval by this unelected commission for a wide range of expenditures, including construction and modification of health care facilities, offering new services, medical procedures, and inpatient care beds. Unlike other licensing laws, CON laws generally are not based on quantifiable criteria, such as experience or education.
Recent studies have shown CON laws fail to achieve many of their stated goals and have instead increased costs for consumers by hindering competition and forcing providers to use older facilities and equipment. A study by the Mercatus Center at George Mason University ranks Georgia’s certificate of need program as the nation’s 18th most restrictive. The study’s authors say CON regulations limit health care competition across the state and leave fewer options for everyone, especially the poor.
Georgia’s CON laws are currently facing two challenges. The first is a lawsuit filed by two doctors, Hugo Ribot and Malcolm Barfield, OB-GYN surgeons who own the Georgia Advanced Surgery Center for Women in Cartersville. The doctors are seeking to open a second facility, which other surgeons would be permitted to use when Ribot and Barfield are not using them. The two doctors say allowing other surgeons to use the second facility would help reduce overhead and give patients increased access to the surgery center. Recent studies found surgery centers such as the Georgia Advanced Surgery Center for Women saved the Medicare program and its beneficiaries $7.5 billion.
Georgia’s CON law agency, the Georgia Department of Community Health, turned down the doctors’ application, arguing the second center is not needed because the doctors cannot be in two locations at once and the second center would not be used daily. The Goldwater Institute says the decision forces patients to pay thousands of dollars more for procedures performed at the main hospital. The Hospital Corporation of America, the largest hospital corporation in the country, owns a facility across the street and opposed the doctors’ application.
The second challenge facing Georgia’s CON laws highlights how disruptive and corrupting those laws can be. In 2008, Georgia’s state legislature amended the state’s CON law to allow the construction of a 50-bed “destination cancer hospital,” a Georgia location for Cancer Treatment Centers of America (CTCA), which opened in 2012. Now CTCA wants to get rid of the 50-bed limit and a provision requiring 65 percent of its patients be from outside Georgia. CTCA also has asked to become a general hospital.
Instead of having to give special treatment to individual providers, the state should open up the market by rolling back or outright repealing Georgia’s CON laws. Eliminating these unnecessary barriers to the health care market would spur development of innovative medical facilities that more effectively meet demand for new and existing patient services—all without inflating costs.
Matthew Glans ([email protected]) is senior policy analyst at The Heartland Institute.
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance.
