WRAL Investigates

Does North Carolina's "CON" law help or hurt access to and cost of health care?

Posted August 23, 2018 12:46 p.m. EDT
Updated August 23, 2018 7:07 p.m. EDT

From hospital beds to imaging machines to rehabilitation units, the North Carolina Department of Health and Human Services controls how many there are and who can operate them. It’s all part of the state’s Certificate of Need (CON) program, which regulates more than two dozen health care-related services. The goal is to reduce cost, increase access and improve the quality of care across the state. The debate is now heating up as to whether CON is meeting its intended objectives.

The idea was born in 1974, when Congress passed the “Health Planning Resources Development Act,” which required states to set up programs to approve or disapprove applications for health care expansion or buying new high-tech health care machines. Congress repealed that law in 1987, but 35 states, including North Carolina, still have CON programs.

WRAL Investigates found North Carolina’s CON program is one of the most sweeping in the country, regulating 25 medical services. Only Vermont, Washington, D.C., New Jersey and Hawaii have more comprehensive CONs.

Calls for repealing all or part of the CON program gained attention earlier this summer when Forsyth County physician Gajendra Singh filed a lawsuit against the state for denying his application to purchase an MRI machine. The lawsuit claims CON violates Singh’s constitutional right to operate his own medical business.

The debate over CON is complicated. Both sides can point to “data” to support their arguments. WRAL Investigates examined multiple studies on health care cost, access and outcomes. WalletHub.com used dozens of parameters to score health care in our state. We ranked 47th in overall care, 50th in cost of care and 46th in access to care.

That same study found the bottom 13 states in overall care all have CON programs. Of the top 10 states in overall care, seven have CON programs, though it’s important to note that most of those performing states also have among the highest health insurance rates among adults.

Opponents say CON is an idea that is

pastits time. “It's sort of strange that in the name of increasing quality we're going to limit people's ability to get access to care at all,” says Matt Mitchell, a researcher and economist with the Mercatus Center, a conservative think tank funded by the Koch brothers at George Washington University. Mitchell argues that limiting a free market is compromising care. “They very clearly limit access to care, they very clearly increase cost in terms of a per unit sense and they seem to decrease the quality of care.”

Mitchell’s not alone in his criticism of CON. WRAL Investigates found a 2004 report from the Federal Trade Commission and United States Department of Justice that concluded “…CON programs are generally not successful in containing health care costs,” and that similar analysis “…applies to the use of CON programs to enhance health care quality and access.”

According to Steve Lawler, president of the North Carolina Hospital Association, CON is needed to ensure care for everyone. “I would say it creates a level playing field for those that are required by law to care for everyone who walks through the door,” Lawler said

Lawler points to so-called charity care provided by hospitals to treat people who are unable to afford care. He estimates that 60 percent of a hospital’s work involves mission care. He warns ending CON and opening up the market for profitable services like imaging and outpatient care would put hospitals in serious financial trouble.

“When you look at Certificate of Need and repealing that or taking that away, it's like pulling a thread from the safety net.”

A former administrator at a rural hospital, Lawler adds, “It would not have survived had someone come in and competed for imaging or competed for surgical services. That hospital would close.”

Mitchell says that argument doesn’t hold weight. “When you look at charity care across the country and you compare the provision of charity care in CON states versus non-CON states, there's no statistically significant difference.”

WRAL Investigates discovered minutes from a 1989 presentation by the FTC to the North Carolina State Goals and Policy Board in which an assistant director told state leaders CON does not “…assure that health care is available to the indigent.”

While both sides will continue to fight for and against North Carolina’s CON laws, any changes will need to come from the lawmakers. Several bills were filed in the last session to remove certain provisions from the CON regulations, including hospice beds, facilities that provide certain eye surgeries and ambulatory surgical facilities. There were also proposals to deregulate some activities performed by smaller, community hospitals.