State Regulations: Stifling Competition In Home Nursing

By Elder J. Olson

Recently, the Georgia Public Policy Foundation asked its members for examples of how government affected their lives. The following article is one of the many responses we received.

My wife and I founded our small nursing service, Share Care Services, six years ago in Brunswick, Georgia. Sharron had been Executive Vice-President in charge of home health nursing for a large company headquartered in Brunswick, which grew from seven to 48 offices while she was there. She was later recruited by a Savannah hospital, where she ran six offices and assisted in establishing their home nursing service program. I mention Sharron’s background only to demonstrate that she is fully competent to direct a home health care nursing service.

Even with our excellent, well-qualified staff, our company is precluded from caring for many patients in our community because we cannot obtain a Certificate of Need (CON). A CON must be obtained from the state by certain health providers in order for them to be reimbursed by Medicaid or Medicare, the government health care programs for the poor and elderly, respectively. To receive a certificate, the State Health Planning and Development Agency (SHPDA) must determine that there is an unmet public need for the proposed service.

CONs were originally conceived as way to minimize the duplication of expensive health services by having a government agency limit the number of providers. In other words, the government would determine the optimum number of service providers in a given market. Not surprisingly, the CON process has accomplished little more than limiting competition while increasing government bureaucracy.

Despite our objection to this law, we applied for a Home Health Nursing certificate in 1991. Although SHPDA found us qualified on the basis of expertise, quality and price, our request was denied on the grounds that the existing and foreseeable need for home nursing services could be met by the two providers in Glynn County that already had CONs.

A nursing agency without a CON is forbidden by law from providing more than one service at a time. For example, we have a patient under the Dependent Living Program for whom we provide personal service attendants and one skilled nursing visit per week. When the patient required intravenous therapy for an infection, a CON agency had to come in to provide the intravenous therapy even though we have qualified nurses on hand who could easily render the care. So we proposed that the other agency also perform the dressing changes and other care, but they refused. As a result, two different nurses on two separate visits must do what one nurse could do in a single visit.

In yet another example of the costs of limited competition, one of our patients received a bill from a provider whose nursing visits cost $90.00 when ours was only $50.00! Since Medicaid and Medicare usually pay for these services, taxpayers are the unknowing recipients of such higher bills.

The real victims of the CON game are the patients who are denied real provider choice. Many patients hire firms like ours to provide care on a 24-hour basis. If they develop medical problems that are reimbursable under Medicare, we cannot provide the needed care. Many of our patients resent the fact that they are restricted to using only designated providers, and find it confusing and invasive when they are forced to have unfamiliar nursing staff in their homes. It also makes them unsure who is ultimately responsible for their care.

Our company was hired privately by a family to provide a Certified Nursing Assistant during the afternoon and night for a terminally ill patient who already had a Medicare-approved agency providing skilled nursing services. When the patient developed problems during the night, the CON agency sent the patient to the hospital emergency room instead of visiting him at home to take care of the problems. By law, we were prohibited from providing the care he needed in his home even though we were present, competent, and willing to do so.

When Medicare was established, the Federal government mandated a CON system in all states. Louisiana refused to comply initially, and gradually CONs have been dropped by other states that determined that the system was not cost effective. Today, only twenty states still have CON laws for home health care, and it is in these states that government-sanctioned monopolies thrive. To borrow an analogy from the Georgia Public Policy Foundation, “requiring a Georgia health care provider to obtain a CON is like requiring McDonalds to get the government’s permission before it can open a restaurant in a small town to compete with Burger King and Krystal.” Even the Home Health Services and Staffing Association, the preeminent professional organization of home health care, has called for the abolition of CON laws.

We need to liberate home health from the stifling, expensive and wasteful CON game. How could it be in the state’s interest to limit the home health care choices of citizens? Why does government selectively ban competitive forces in this particular market?

Even without a CON, our company has prospered by providing exemplary service at competitive rates. Yet, with the high cost of health care being a national concern, and with outraged taxpayers demanding relief from nonsensical government regulation, how can we afford not to act in Georgia? There simply is no justification for Certificates of Need in home health care, and Georgia should follow the lead of many other states and eliminate them.

Elder J. Olson is a member of the Georgia Public Policy Foundation and Owner/Director of Operations of Share Care Services, Inc. The Foundation is a nonpartisan, member-supported research and education organization based in Atlanta, Georgia, that promotes free enterprise, limited government and individual responsibility.

Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

ã Georgia Public Policy Foundation (March, 1995) Permission is hereby given to reprint this article, with appropriate credit given.