Thirty-five states and the District of Columbia currently impose certificate-of-need (CON) restrictions on the provision of healthcare. These rules require providers to first seek permission before they may open or expand their practices or purchase certain devices or new technologies. The applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.
…from a Mercatus article on healthcare “Certificates of Need”, linked by The Advice Goddess.
In most other industries, collusion of providers in order to keep supply down–and, hence, prices up–is considered an antitrust violation and can carry heavy civil and criminal penalties.
Does anyone see any legitimate public-policy rationale for the requirement for the CONs in healthcare?
The Democrats had several theories on healthcare economics that have been proven to be ineffective, if not counterproductive.
One was to double the number of medical students to flood the market and drive prices down. I graduated with a class of 64 in 1966. By 1980, the same medical school had 200 students per class and, during the time I was active faculty, the class size reached 233. Did prices go down ?
The CON theory was that rationing technology would keep its use down. Did it work ?
Medicine got a lot more political. We went from “a cottage industry” in Ted Kennedy’s words, to an industrial model that is more expensive and less responsive to the individual. Corruption increased substantially, as always happens when there is rationing.
Mike K…”I graduated with a class of 64 in 1966. By 1980, the same medical school had 200 students per class and, during the time I was active faculty, the class size reached 233. Did prices go down ?”
If the class size has stayed at 64, or some proportionate increase based on population size…and all the other changes in healthcare had been held constant–much more government involvement in funding, in particular…would prices be what they are now, or would they be even higher?
I’m not sure but the theory of “flooding the market” and that’s what they said they were doing, was obvious a delusion.
What is happening now is the increasing role of non-MD practitioners, which make a lot of sense.
I tried to convince my son, who is a paramedic firefighter, to go to PA school. My wife, during the time we were divorced, became a nurse practitioner. My son’s wife’s family had her as a family doctor for years and loved her.
We got married again a few years ago after 25 years apart,
WalMart now has some clinics run by NPs for simple illness.
Most workers comp clinics are run by PAs and the orthopods who are supposed to be running them, come in only for surgery.
I spent ten years reviewing Workers comp claims and I spent a lot of that time talking to PAs in those clinics. In fact, they often were appreciative of some advice on handling some cases. By law, they are supposed to be supervised by an MD but that usually doesn’t happen. My ex-wife worked for a GP I knew and he was usually too busy to advise her so she would call me.
Until we go to a more market based system, which is anathema to Democrats, we will continue to have problems with cost inflation. I have been an advocate for the French system for reform here and the links are to the right. The best system for us would be a cash market with insurance for insurable events. That leaves out the poor and the French system takes pretty good care of that.
One problem that will bedevil us unless the Democrat Party collapses, is the desire to provide “free stuff” to buy votes. It’s not just a Democrat problem but they are adamant in opposition to rational reform.
I’ve been generally happy with NPs. For one thing, they don’t seem as rushed as do virtually all MDs.
I wonder how much of the additional physician supply has been eaten up by (a) additional complexity of insurance billing requirements, and (b) data entry for electronic patient records systems.
data entry for electronic patient records systems.
My friends who are still in practice, especially primary care, tell me it uses up 25% of their time.
Now, we are getting “scribes” who are not well trained and add expense.
For years, I was an enthusiastic advocate of EHR and belonged to the ASIM, the Medical Informatics Society.
What the Obama people gave us is a low bidder abortion.
It is the principle reason I quit teaching. The system at LA County required that you enter a diagnosis to begin. That is contrary to a thousand years of medical practice. You cannot delete that diagnosis once you have found the correct diagnosis.
Even in past centuries, the differential diagnosis was often all the physician could do.
It was written by people with no experience of medical practice.
A few years ago, at the American College of Surgeons convention there was a young surgeon who had written his own medical record software using Microsoft Visual Basic. It was great. I knew how to write Visual Basic and was familiar with Visual C++, a more powerful system.
The VB system the guy had written had all sorts of pull down menus for drugs and allergies and other items of history.
The Obamacare systems, and they are not all compatible, are far less useful than this guy wrote in his spare time.
” The system at LA County required that you enter a diagnosis to begin.”
Good lord. What on earth was the justification stated for this, if any?
Sentence first, trial afterwards.
What on earth was the justification stated for this, if any?
I didn’t use it much. I only wanted to read the records of the patients my students were examining to see if they missed things in the history. As an instructor, I was not given a password so I could read the records, which were poorly organized.
Years ago, we all learned the “SOAP” system of charting. The letters stand for “Subjective, Objective, Assessment, and Plan.”
The EHR was not organized this way.
Inpatient histories are organized differently. They begin with Chief Complaint, which was not a diagnosis but the patient’s reason for being there in their own words.
Once the history is recorded, the next notes use the SOAP system.
The EHR was nothing like this. I suppose the first “Diagnosis” was like a Chief Compliant but that was contrary to medical tradition.
Anyway, I gave up soon after it became the system.
In my area the dominant hospital combine owns most of the specialist groups. Some of those groups will not do business with any patient who is not covered by one of the insurance companies that those groups have agreements with. If you try to make an appointment as a cash customer and your name/address/SS or phone number appears in the hospital’s DB as associated with an uncovered insurance company the practice will refuse your business. There are other hospital groups and independent practitioners in the area so probably most patients have alternatives, but would any other business could get away with this kind of collusion and restraint of trade?
Jonathan, they probably can’t take cash customers as it would violate their contracts, either with Medicare or the insurance company.
This is how Obamacare destroyed the medical system.
Hospital administrators have hated doctors for 50 years. I’ve talked about it with some of them.
We were too independent and favored patients over them. That is now over.
Frankly, when we moved to Tucson, I expected to have to find a cash practice but there is so much Medicare here that I guess all the primary care people think they have to take it.
The cash (“Concierge”) practices are all sports medicine.
It is so complicated.
Maybe I’ll do a post on this.
In an ideal world, or something close, it would make sense to have Certificate of Need for health care facilities. The evolution of health care systems has always been chaotic. How many cities have entirely parallel systems that duplicate services? Lots. For one thing historically you’d have Catholic and Protestant (or municipal) hospitals. A hold over perhaps from an era where you’d certainly not wish to take a chance on dying under the wrong roof! So you get two or more systems each operating well under full capacity.
(I would note that enough stretch capacity to cover flu season and/or major trauma events should be built in).
It is hardly a true free market system when the percentage of “consumers” who actually see and have to pay the bills directly is so small. If someone else is paying the motivation is to demand the most expensive i.e “best” options available.
Also the capitol investment is generally large and often left behind by technology changes. Many hospitals have too many inpatient rooms. But the counterpoint is that investment in other areas gets short changed. Mental health and substance abuse programs don’t enhance the hospital/clinic systems prestige as much as say, the latest MRI scanner or upscale Birthing Suite.
I spent a few years as medical director of a small HMO. It has made me a bit cynical regards the business of medicine.
And of course we live in a world so far from ideal that with or without a CON system the big players will get what they want anyway.
TW
“In order to open a new pizza restaurant, the applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.”
“In order to open a new shoe store, the applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.”
“In order to open a new nail salon, the applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.”
How about in all the above cases, as with hospitals, we agree it’s none of the government’s business?
“In order to open a new pizza restaurant, the applicant must prove that the community “needs” the new or expanded service, and existing providers are invited to challenge a would-be competitor’s application.”
To break out of the idiocy that rules healthcare today, we must end the prepaid care characteristic of present day “insurance” which is not insurance.
Nobody insures their car for oil changes. Some car makers tried. I think it was BMW that included free oil changes for a while.
The last BMW I had needed all sorts of major repairs which were in warranty, fortunately.
Since then, I’ve stuck to Hondas and Toyotas.
If we could get back to cash payment for routine care and real insurance for insurable events, we would cut the cost of care by at least 50%.
I watched some of this happen. I remember when insurance would only pay for colonoscopy if it was done as an inpatient in a hospital.
So everybody wanted to be admitted for colonoscopy so it would be “covered.”
Related: Trump Admin Requires Hospitals to Post Standard Prices Online
Why not require that cash prices be no more than some specific premium…say, 20%…more than the lowest insurance-negotiated price? Seems to me this could be justified on antitrust grounds.
I think this is more PR but cash prices would not work because of Medicare and insurance contracts. Legislation allowing a cash price regardless of contracts and Medicare might be useful.
I thought cash prices are usually less than insurer-negotiated prices, but can’t be less than Medicare? I don’t know if those prices are “official” or something more under the table.
Legislation allowing a cash price regardless of contracts and Medicare might be useful.
That might help. However, the main problem is on the demand side as most payment is by insurance companies. Insurance reform that put patients in control of payment would spur hospitals to compete on price.
the main problem is on the demand side as most payment is by insurance companies.
That is the “Free Stuff” system we have now. To get any control of cost we need to go back to the system we had when I began in practice. Most health insurance was “indemnity style” which paid a flat fee for a procedure.
It also paid for insurable events, like appendicitis or heart attacks.
Most primary care was cash. The HMOs made inroads, especially with children. and the pediatricians began demanding payment for routine well baby care. I remember the CMA conventions.
Many HMOs were employer paid so the cost was not borne by the subscriber.
When I began in practice in 1972 in Burbank, an industrial town near LA, many patients had two employed spouses. One would have Blue Cross, the other Kaiser. That way, they avoided the long waits and rude treatment by Kaiser primary care docs but, if disaster struck, they were covered by the HMO.
Two women docs I knew in Orange County ran a walk-in cash clinic for years in Dana Point. They took Visa and Mastercard and NO insurance. Most of their patients were HMO members who would rather pay cash than wait or rely on a nurse run “Advice Line” like my wife ran for years at Kaiser.
Ending employer-paid health care would be tough but the only path to real reform,
My partners and I evaded the state CON ten years ago by building a micro hospital for under 1m in a small town with one other hospital owned by a religious not for profit that ran it as their own fiefdom. We had to beat three lawsuits and watched as our competitor broke every rule their “religion” was built on. The region was clearly carved up into spheres of influence by the major players and once we won the lawsuits we got a big buyout rather than allow us to compete. By that time we were so exhausted by the threats and the calumny that we took it””-the community has had to endure a series of tax increases as all the property we sold came off the tax rolls and the employee docs are now distant and disengaged
Lesson?
CONs are corruption machines, designed only to protect the incumbents
They should be rescinded
Tejd,
Agree, that is exactly what they are going to become, regardless of all the stated intensions. Brian gave good examples: shoes are really important, everyone needs them.
Death6
one other hospital owned by a religious not for profit that ran it as their own fiefdom.
This is what happened to the hospital I used to practice in. My partner and I worked very hard to make it the best hospital in Orange County and came close to doing so. When the trauma survey team came to town, they were amazed at how well run it was.
I told the story here.
At the time it was owned by a group of doctors, most of whom did not practice there. Some we would not have allowed to do so.
Eventually, it was sold to an order of nuns who have wrecked it as far as I am concerned. They hired a CEO from PepsiCola with no healthcare experience. He made his brother-in-law, who is a chiropractor, the head of the Surgery Department.
They bought up all the medical practices and fired the surgical group that had run the Trauma Center for 30 years.
My wife has emphysema and she was admitted several times for pneumonia. For each admission, she was required to make a “voluntary donation” of $500.
We are now in Tucson and she is thriving in this climate,