West Virginia Reduces Reach of Certificate-of-Need Law

Published June 5, 2017

West Virginia Gov. Jim Justice (D) has signed a law reducing the regulatory burden on prospective buyers of financially distressed hospitals.

State law requires owners of medical facilities to apply for and obtain a “certificate of need” (CON) from state regulators before opening or acquiring hospitals. The new law transfers authority of the CON review process from the autonomous West Virginia Health Care Authority to the state Department of Health and Human Resources on July 1. The same legislation, House Bill 2459, signed into law on April 10, exempts from the CON process any new applicants attempting to acquire struggling hospitals.

“Any person purchasing a financially distressed hospital, or all or substantially all of its assets, that has applied for a certificate of need after Jan. 1, 2017, shall qualify for an exemption from certificate of need,” the law states.

The CON law exemption could expedite the sale of Ohio Valley Medical Center (OVMC), in Wheeling, to prospective buyer Alecto Healthcare Services. Alecto contends OVMC is financially distressed, The Intelligencer/Wheeling News-Register reported on April 11.

Step Toward Full Repeal

State Sen. Tom Takubo (R-South Charleston), a practicing pulmonary and critical care physician, says CON regulations deprive West Virginians of the best medical care.

“My personal belief is CON laws are likely stifling innovations as well as potential access in our state,” Takubo said. “This was certainly a step closer to full repeal.”

The exemption makes it easier for market forces to assist struggling hospitals, Takubo says.

“Although HB 2459 did not repeal CON [laws], it did open the process further to remove the often-burdensome process to allow hospitals in distress to be bought out without going through the CON process,” Takubo said.

‘Need to Go’

State Sen. Robert Karnes (R-Tallmansville) says voting in favor of the CON exemption was a matter of principle.

“For me, it was not about any particular deal but instead about moving in the direction of less government interference and making it easier to deal with when it does occur,” Karnes said.

Reducing government obstruction of health care providers’ decisions will make markets more competitive, Karnes says.

“I am a strong believer in the power of competition and free markets, so I think the CON laws, which are much broader than health care, need to go,” Karnes said. “It may need to be done over time.”

Ben Johnson ([email protected]) writes from Stockport, Ohio.

Internet Info:

Matthew Glans, “Certificate-of-Need Laws Hurt West Virginia Health Care Market,” Research & Commentary, The Heartland Institute, February 23, 2017: https://heartland.org/publications-resources/publications/research–commentary-certificate-of-need-laws-hurt-west-virginia-health-care-market

Luke Ferree and Michael T. Hamilton, “West Virginia Bill Would Remove Government Reviews of Hospital Prices,” Health Care News, February 26, 2016: https://heartland.org/news-opinion/news/west-virginia-bill-would-remove-government-reviews-of-hospital-prices

Official Connections:

Sen. Robert Karnes (R-Tallmansville): http://www.legis.state.wv.us/Senate1/lawmaker.cfm?member=Senator%20Karnes

Sen. Tom Takubo (R-South Charleston): http://www.legis.state.wv.us/Senate1/lawmaker.cfm?member=Senator%20Takubo

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