Ask Lee County Commission Chair Billy Mathis about Georgia’s controversial Certificate of Need (CON) law.
He’ll say it’s anti-capitalist.
Mathis will also say CON endangers his constituents’ lives and restricts access to their choices of healthcare.
Lee County residents have a hospital nearby, Phoebe Putney Memorial, in the adjacent Dougherty County. State regulators approved another hospital, the proposed Lee County Medical Center (LCMC) as a competitor — but through the CON process, those same regulators recently took that approval back.
Mathis has nothing negative to say about Phoebe Putney or its services. He just wants another hospital for the sake of Economics 101, which teaches that competition improves services.
“Monopolies breed inefficiency,” Mathis said.
“We want folks here to have a choice, but without competition there is no incentive to be any better.”
That’s a point that Mathis said Georgia’s media figures and members of its political scene overlook as they debate whether to keep or do away with CON.
The Georgia General Assembly implemented CON laws in the late 1970s. They require hospital personnel to prove that the local community needs new healthcare services before Georgia Department of Community Health (DCH) officials allow them to move forward. This can block the construction of new healthcare facilities.
Forty years ago, government officials said CON would stop communities from duplicating unnecessary services, a point repeated today by Monty Veazey, the president and CEO of the Tifton-based Georgia Alliance of Community Hospitals (GACH).
“You would not want an open-heart surgery center in a given hospital and then have Lee County open another hospital that offers the same thing. It would take away from both hospitals,” Veazey said.
“Study after study shows the number of cases you do, the more efficient you become and the safer it is for the patient. If you allow the new hospital to come in and pull those patients away then you may have a less quality outcome.”
Veazey also said the laws of the free market do not apply to healthcare. He said the government is the largest payer into the hospital system on behalf of patients. He estimated, for example, that 30% of Lee County’s patients rely on Medicaid.
Critics of CON, however, say the law stifles competition and empowers bureaucrats. The Arlington, VA-based Mercatus Center, which promotes market-oriented ideas, said CON laws nationwide “tend to restrict access to healthcare, make services more expensive and undermine the quality of care.”
Mathis said several Lee residents, as many as 40% of the county’s population, travel elsewhere for quality healthcare because they can afford it.
LOUSY AND EXPENSIVE HEALTHCARE
As Georgia Health News reported in 2017, healthcare prices in southwest Georgia are notoriously high compared to other areas of the state.
Albany, the county seat of Dougherty, is a low-income area.
According to the most recent U.S. Census, Dougherty has a 26.1% poverty rate. Nearly 13% of the population under age 65 has a disability. U.S. News and World Report, ranks Dougherty’s overall population health scores as 41 out of 100. County Health Rankings ranks Dougherty among Georgia’s least healthy counties (153 out of 159). The website says Dougherty has a 45% obesity rate, far surpassing the state average of 34%.
Nevertheless, experts say the need for competitive medical services in the area is dire.
The Washington Post reported in 2014 that Albany and the southwest Georgia region “is one of the most expensive places in the nation to buy health insurance through the new online marketplaces created by the federal health law.”
“The only places with higher premiums are the Colorado mountain resort areas around Aspen and Vail, a high-cost-of-living area unlike Georgia,” the Post reported.
The Albany Herald, citing a 2021 survey of Georgia adults, reported that “the southwest and eastern regions of Georgia have higher affordability problems” with health care costs.
These facts, as the Georgia Health News said, are partly attributable to Phoebe Putney’s control over hospital care in that region. That control was cemented in 2011, when Phoebe Putney acquired its sole competitor in the Albany market, the Palmyra Medical Center.
THE LAWSUITS BEGIN (AND END)
Citing a breach of antitrust laws and a potential increase in medical prices for local consumers, the Federal Trade Commission (FTC) challenged Phoebe Putney’s acquisition of Palmyra Medical Center. In 2015, the FTC and Phoebe Putney agreed to settle the matter.
Per the terms, Phoebe Putney would not oppose a CON application for a general acute-care hospital in the Albany area for up to five years.
Georgia regulators approved Lee County’s request for a 60-bed, $123 million hospital that would create 350 jobs and have a $38 million annual economic impact. As the Georgia Health News reported, this was “a triumph for the southwest Georgia county and a significant setback to Phoebe Putney Health System.”
But Dougherty County commissioners formally opposed the Lee County hospital. They said it would hurt Albany’s Phoebe Putney Memorial. GACH officials also opposed the Lee hospital.
In the spring of 2018, GACH and Dougherty County commissioners both filed lawsuits to stop the CON appeal. That legal opposition, however, started to unravel only days later when GACH officials dropped their suit, citing the need to tackle other initiatives.
Then-Dougherty County Commission Chair Chris Cohilas, though, said DCH disregarded CON guidelines and failed to assess the negative financial impact that the Lee County Medical Center would put upon Dougherty.
As the Georgia Health News reported in 2018, Cohilas said the new hospital would force some Dougherty residents to lose their jobs. Even more residents, he added, would pay higher property taxes. Cohilas did not elaborate.
Due to Dougherty County’s lower income rates and poor health rankings, Phoebe Putney supported expanding Medicaid.
Phoebe Putney spokesman Ben Roberts said in 2018 that the Lee County project “will divert tens of millions of dollars a year from Phoebe by pulling away low intensity insured patients.”
In June of that year, Dougherty County commissioners dropped their lawsuit. Cohilas said it was time to drop the suit, citing how one judge rejected Dougherty’s request for an injunction against the Lee hospital.
THE FINISH LINE?
Veazey said this spring that DCH staff members reject very few new hospital proposals and added the agency’s approval rates are as high as 97%.
“Look at Lee County. When Phoebe opposed [another hospital], the county still got a CON,” Veazey said.
“I don’t know of a county in this state that is without a hospital that could not get a CON to build one, but I also don’t know of any county that has applied for a CON that has not gotten a hospital either.”
A few years ago, Mathis said Lee County officials “did all of the work [for DCH] and got right down to the finish line.”
“And that’s when DCH pulled the rug out from under us,” Mathis said.
After COVID-19 subsided, county officials prepared to issue bonds for a new hospital.
“For a time, the bond market was in chaos. DCH said that was something not beyond our control, which was complete nonsense,” Mathis said.
DCH staff did not comply with a request for comment. They instead point to a March 17 denial letter from DCH Executive Director for the Office of Health Planning Karesha B. Laing. In that letter, Laing said the individuals behind the proposed LCMC took too long to make the necessary arrangements.
“LCMC’s failure to secure financing for the project in a timely manner has meant an almost three-year delay in addressing the identified need for general acute care hospital services in Lee County,” Laing added.
Mathis said high interest rates do not explain why DCH rejected LCMC. Instead, “nobody was buying bonds for a few months.”
“There was an inverted yield curve for a while. The bond funds were having all these folks cashing out,” Mathis said.
“It was a nightmare for a few months. I don’t think the folks at DCH even understand that.”
In this year’s Georgia General Assembly, State Sen. Greg Dolezal, R-Cumming, sponsored new legislation, Senate Bill 99. If enacted into law, the bill would have exempted rural counties from CON requirements, provided they meet certain criteria. For example, these facilities must provide healthcare services to indigent patients and participate in Medicaid and Medicare. The Senate passed the bill early in the session before it died in the House.
As the Atlanta Journal-Constitution reported this month, powerful forces rallied against the bill. They say CON works because it “prevents hiring wars between rival hospitals in small communities.”
Mathis said state legislators talk about doing away with CON every year.
“I was really shocked when the Senate passed SB 99. But then I still didn’t think it would go anywhere and obviously it didn’t,” Mathis said.
“The reason it didn’t go anywhere was because of money. There are a lot of big-monied interests that don’t want anything to change. They like it just like it is.”
When asked to identify those big-monied interests, Mathis blamed nonprofit hospitals and lobbyists, although he would not name names.
“This is all very discouraging, but we will never quit. We will get another hospital one day. We are a small county, but we like to think we are one of the best counties in the state,” Mathis said.
“We try very hard. We will do what is best for our constituents and our citizens.”