Even During a Pandemic, NC Government Actively Denying Requests to Expand Healthcare Resources

RALEIGH – It is so asinine as to one wonder why anyone ever thought it was a good idea in the first place, but since it’s 2020, and the surreal is real, the stupidity sticks out even more. We’re talking Certificate of Need laws in North Carolina, and even during a pandemic, bureaucrats are wielding these laws to deny requests from healthcare providers to expand their healthcare resources.

Let me repeat that: During a PANDEMIC, featuring weeks in which experts predicted out hospital beds would be overwhelmed, bureaucrats in North Carolina REJECTED requests from hospitals to build MORE HOSPITALS.

From the Civitas Institute‘s Leah Byers:

“[…] in March 2020, the state of North Carolina denied a request from Atrium Health to build a new hospital with 30 beds and two operating rooms in Cornelius, North Carolina. A month later, five healthcare facilities in Wake County were prevented from purchasing a new MRI machine because the government determined that the county only needed one and there were six facilities that applied.

These examples happened during a global pandemic. But the practice is not a new one.

North Carolina policymakers and government officials need to own up to their role in suppressing healthcare supply for decades. Then, the state needs to change it going forward.

The culprit: CON laws

The hospital in Cornelius and the MRI machines in Wake County never came to fruition because they were denied their requests for Certificates of Need (CON).  CONs are essentially government permission slips that are required to open or expand healthcare facilities or utilize certain healthcare equipment. Healthcare providers in North Carolina are required to obtain a CON for things such as MRI machines, helicopters to transport patients, a variety of hospital or treatment beds, and much more. In fact, in 2016, North Carolina had the fifth most restrictive CON laws in the country, behind only Vermont, Hawaii, the District of Columbia, and New Jersey.

CON supporters claim that the practice ensures there is an adequate supply of healthcare resources and that those resources are distributed appropriately, especially in rural areas. On their face, these claims are counter-intuitive (ensuring adequate supply by restricting supply?). They’ve also been empirically disproven. For a full overview of how CON laws fail to meet their stated goals, check out the research review on the subject from the Mercatus Center.

CON laws can often prevent healthcare providers from expanding their capacity to meet the demand they perceive for their services. The requirements can also prevent new providers from joining the marketplace, shielding industry incumbents from the downward pressure on prices that comes from increased supply and competition. For more information about how government intervention drives up healthcare costs, check out an earlier article in this series on that topic here.

Current coronavirus response

In March, when North Carolina had less than 20 confirmed cases of COVID-19, the state took action to ease the regulatory burden on existing CON holders. The Department of Health and Human Services (DHHS) issued a temporary waiver on acute care beds, the technical name for hospital beds. The waiver was a positive step that allowed hospitals to exceed their number of approved hospital beds without getting an additional CON. Typically, hospitals cannot increase their bed capacity by more than 10 percent without going through a CON process.

However, the waiver still puts parameters on bed expansion and gives DHHS the ability to revoke approval for the expansion if it is not satisfied that the hospital meets the stated criteria. For example, the hospital administrator is required to “provide an explanation and certify that the increase in bed capacity is necessary for public health and safety in the geographic area served” (page 2, PDF below). So, while hospitals are granted reprieve from the full CON process, they are still under threat of government strangulation – even during a global pandemic. […]”

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And yet, hospital associations lobby hard and long to keep the CON regime in place. Why? Because it keeps competition from stealing away their most lucrative patients, like those seeking elective surgeries or a simple imagery scan.

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Man, it sure would be nice if there were a little MORE healthcare competition for those rainy days when we’re, who knows, hit with a Pandemic Panic.

You’ll probably want to read the rest of Byer’s piece about how reluctant the government is to give up this arbitrary power over how many healthcare resources you have access to. Then, it may be useful to inquire with your local state representative and state senator as to if they support such an asinine law with deleterious results.

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