The Georgia House Study Committee on Certificate of Need Modernization held its first hearing this week in Atlanta. Speaker Jon Burns, R-Newington, kicked off the bipartisan committee, which also includes healthcare executives from the private sector, by imploring members to approach this topic with an open mind, follow the facts and ultimately propose recommendations that will improve access to quality, affordable healthcare.
In his opening remarks, Chairman Butch Parrish, R-Swainsboro, acknowledged that healthcare delivery has changed since the inception of CON laws in 1975, and noted that the purpose of this committee is to examine how the state approves new healthcare facilities or service lines.
While committee members and those who testified expressed differing opinions on the effectiveness of CON laws generally, one recurring question from the committee members centered on how the existing application process works.
In the CON study published earlier this year by the Georgia Public Policy Foundation, we analyzed each CON application the Georgia Department of Community Health (DCH) received from 2017-2022.
During that six-year period, 379 CON applications were filed with the state and cataloged in the department’s online repository. When we published the study in April, 43 of the applications were still waiting for the initial decision on their CON by the state.
Our analysis showed the following:
1. When a competitor objects to an application, the odds of denial more than double from 20% to about 50%.
2. Every additional party opposed to the application increases the odds of denial by about 11%.
3. Any opposition to an application adds 234 days to the wait time for a decision, but competitor opposition adds about 520 days to the wait time.
4. Each additional party opposed to the application adds another 129 days.
5. The cost of the project is not statistically significantly related to either approval or wait times.
6. There don’t appear to be any statistically significant trends over time in approval or wait time.
Defenders of the existing system once again encouraged those wishing to open or expand healthcare services to just “file for a CON.” Thankfully, the committee acknowledged just how time- and resource-consuming the CON process actually is. Especially once the seemingly endless appeal process has added additional delays.
As we concluded in the study, filing for a CON often does not represent a realistic route to approval for most applicants that are not health systems or hospitals. Many smaller physician offices choose to forgo equipment purchases or upgrades out of an acceptance they will not be able to compete with larger competitors willing to spend time and money on exacting regulatory barriers and legal appeals.
Additional questions about the role of DCH and how the CON application process is regulated concerned how they determine a community’s healthcare need before approving a project. This was an area we also explored in the study.
Unlike other varieties of regulation, the CON process does not typically include an assessment of a provider’s qualifications. Nor do regulators appraise the adequacy of a provider’s facility or its safety record. Instead, regulators are charged with determining whether the community “needs” the service the provider hopes to offer.
We identified multiple reasons why this is problematic for regulators, with the most significant being the fact that it can so easily be used for anti-competitive purposes. In most CON states – including Georgia – a certificate can be denied if the regulator finds the new service will “duplicate” an existing service.
This virtually guarantees a local monopoly, especially considering that in most CON states – including Georgia – incumbent providers are allowed to sit on the board that makes the decision. This is why the regulations are sometimes called “competitor’s veto laws.” And in most CON states – including Georgia – incumbent providers are allowed to be a part of the process, challenging competitors’ applications and in some cases even appealing decisions that they do not like. As a remarkable indication of the anti-competitive nature of CON regulations, competitors’ objections are often dropped and CONs are subsequently granted once applicants agree not to directly compete with incumbent providers.
As the delivery of healthcare continues to evolve, it is right to examine whether the regulatory apparatus can evolve with it.
