Asheville – At the Buncombe County Commissioners’ worksession Tuesday, Chair Brownie Newman informed the public that the commissioners had been asked to sign a letter of support as part of a Certificate of Need (CON) process.
According to the staff report, “The 2022 State Medical Facilities Plan [SMFP] has identified a need for 67 acute care beds in the Buncombe-Madison-Yancey-Graham service area.”
Newman said no particular beneficiary of the CON was attached to the application, but at least two large hospital systems with an established presence in North Carolina, AdventHealth and Novant Health, had already expressed interest in submitting proposals. Also appealing to Newman was that these health systems are nonprofits. The staff report states the “alternatively-owned facility” would, “stimulate competition.” What was not part of the discussion was that Mission representatives had also expressed an interest in applying for the same CON.
In other words, the commissioners’ letter spoke in opposition to Mission expanding even more. Since being purchased by the for-profit HCA, Mission has fallen from grace in the court of public opinion, with tales of woeful understaffing, lack of cleanliness, and other cost-cutting measures overshadowing the bright and talented doctors and nurses who work tirelessly to promote patient wellbeing.
A letter was prepared, in Newman’s name, asking the chief of the North Carolina Division of Health Service Regulation’s (DHSR’s) Healthcare Planning and Certificate of Need Section, Micheala Mitchell, to please accept support for a nonprofit application. More emphatically, after Newman stated he would prefer the letter to reflect more of a group effort by all commissioners, the most recent draft states that the board, “unanimously voted to urge the DHSR to approve” the CON.
Who are AdventHealth?
AdventHealth was founded in 1973. With headquarters in Florida, it has a presence in nine states, operating 45 hospital campuses with a total of over 8,200 licensed beds. AdventHealth treats over five million patients a year. Novant Health was founded in 1891 in Winston-Salem. It operates in only four states but has an integrated network of clinics, outpatient centers, and hospitals operating out of 640 locations. Novant serves over four million patients annually.
A small hospital can sound appealing to people in need of general care, who don’t want to wait forever in the emergency room of a big, understaffed hospital and feel lost in the shuffle. Yet, should Mission not win the bid, the successful applicant will likely have to farm out patients to Mission for timely, specialized care, the word “seamless” being far from the mind of anybody familiar with the territory. Mission’s main campus alone has 815 beds, and its physicians specialize in over 50 areas of care. Mission’s entire system comprises six hospitals, one rehab hospital, 124 doctor’s offices, and five urgent care centers; its parent company, HCA, of course, is much larger.
Is there a genuine need?
In North Carolina, healthcare providers are required to obtain a Certificate of Need (CON) from the Department of Health and Human Services before investing in a “new institutional health service.” Included among the services are expensive equipment, facility expansions, and new facilities, like hospitals. The identification of this particular certifiable need occurred during the drafting of the SMFP, an annual document of the DHHS and the North Carolina State Health Coordinating Council that seeks to close gaps in services. Once a draft plan is completed, public hearings on the plan itself will be hosted throughout the state.
Providers wishing to fill any of the identified needs may submit an application. The nonrefundable application fees run between $5,000 and $50,000. The application period for the 67-acute care bed facility begins June 15.
During a public comment window, anybody may voice their opinions about the application by emailing email@example.com and the analyst assigned to that particular CON application. The assignment for this CON will soon be posted on https://info.ncdhhs.gov/dhsr/coneed/comments/index.html, and the analysts’ email address will be on https://info.ncdhhs.gov/dhsr/coneed/pdf/countyassignments.pdf.
Following this, the agency will review the application to verify conformity with state law and agency rules. Once a decision is made, an applicant may initiate an appeal process, and once the certificate is awarded, the recipient must file progress reports with the agency. If, at any time, the agency determines that the certificate holder is not progressing in good faith, the certificate may be withdrawn.
Governmental Red Tape
Classical Chicago-Austrian economists view CON laws as yet another means by which entrenched monopolies use the power of the government to prevent lateral entry into their markets. A complex, expensive process navigated better with legal and lobbying teams is part of the game. Thus, in addition to failing to find evidence to support claims that CONs restrain medical cost escalation, they claim CONs make healthcare delivery more expensive by building additional rent-seeking activities into the cost of doing business, while solidifying market share for incumbent industries with no incentive to deliver superior and innovative treatments.
Supporters of CON
An argument less satisfying economically is put forth by CON proponents. They argue that the bureaucratic maze reduces pricing by preventing duplication of services; in other words, they disagree with Adam Smith and argue that vendors whose supplies outstrip demand will raise prices. The argument is that parties responsible for unused beds and equipment will rack up maintenance costs without offset, rather than putting the assets to profitable use. CONs can, at least, be used to ensure more equitable healthcare if, in the process, CON approval is made contingent upon the applicant subsidizing care in underserved areas.
CONs were first mandated by the National Health Planning and Resources Development Act of 1974. Following a repeal of the mandate in 1986, CONs remain in place in all but 12 states, with the exceptions preponderating in the Rocky Mountains. While the last CON repeal occurred in 2016, states including North Carolina actively continue to weaken their CON laws.