General Assembly to renew debate over certificate of need law

ATLANTA — State lawmakers have eased restrictions in Georgia’s certificate of need (CON) law over the years, making it easier for providers to build new health care facilities or offer new medical services without proving the community needs them.

Now, a push is on to repeal the CON law altogether, bolstered by a six-figure ad campaign launched ahead of this year’s General Assembly session by Americans for Prosperity (AFP), a conservative advocacy group founded by the Koch brothers.

“Right now, state bureaucrats are middlemen, determining whether your town can get a new hospital or if your doctor can order a new X-ray machine,” said Tony West, the AFP’s deputy state director for Georgia. “Burdensome certificate-of-need laws are to blame.

“These laws force providers to get a government permission slip to open a new office or offer a new service. AFP-GA is calling on the Legislature to repeal these laws.”

The upcoming debate under the Gold Dome promises to pit free-market advocates including the AFP against representatives of Georgia’s politically influential hospital industry, who warn that losing CON would be a disaster for health care access, particularly in rural areas.

“A lot of out-of-state private equity money wants to come in and repeal CON so they can build new facilities,” said Monty Veazey, president and CEO of the Tifton-based Georgia Alliance of Community Hospitals, which represents the state’s nonprofit hospitals. “[But] nobody’s going to build a hospital in a rural area where they can’t make any money.”

Georgia’s CON law was first passed in 1979 to comply with a federal mandate aimed at reducing health care costs by avoiding duplication. About three dozen states currently have CON laws on their books.

Georgia lawmakers have gotten rid of some of the law’s restrictions since its original adoption. In 2008, the legislature exempted physician-owned ambulatory surgery centers with a single specialty from having to obtain a CON from the state Department of Community Health (DCH).

In 2013, the legislature limited the filing of objections to CON applications to existing hospitals within 35 miles of the proposed site of a new facility seeking a certificate of need.

The General Assembly came back again in 2019 and raised the capital and equipment spending thresholds requiring applicants to apply for a CON from $3 million to $10 million for capital expenditures, and from $1.3 million to $3 million for planned equipment purchases.

The 2019 legislation also exempted from the CON law planned acquisitions of existing health-care facilities that involve corporate restructuring.

While those changes to the law were made nearly four years ago, the DCH’s governing board didn’t adopt final rules implementing them until March of last year due to delays caused by the pandemic, said Anna Adams, executive vice president of external affairs for the Georgia Hospital Association. Because of those delays, it’s premature for lawmakers to consider further changes to CON, Adams said.

“Some of these items have not yet been implemented,” she said. “Let’s wait and see these work.”

It’s unclear whether legislation introduced into the General Assembly this year will call for a further loosening of restrictions in the CON law, an outright repeal, or both.

“There might be some smaller bites at the apple,” said Chris Denson, director of policy and research for the Georgia Public Policy foundation, a think tank that advocates free-market approaches to public-policy issues. “There are various ways to go about piecemeal reform.”

Kyle Wingfield, the foundation’s president and CEO, said one example of reforms to the law could be a further increase in the threshold for planned capital and equipment spending that triggers the CON requirement.

Denson said another would be allowing applicants for new ambulatory surgery centers to file only a letter of non-reviewability (LNR) with the state rather than a CON. Unlike applying for a CON, the LNR process does not allow third parties to contest a project, he said.

But Denson said he supports a full repeal of CON. He cited a recent study from the Mercatus Center, another free-market oriented think tank at Virginia’s George Mason University, that found states without CON laws have opened more new hospitals than CON states.

“Pennsylvania has a very similar rural profile to Georgia and hasn’t had a CON law in place since 1997,” he said. “Georgia has closed nine rural hospitals since 2005. Pennsylvania has closed five.

“With an outright repeal, you would see additional health care facilities open up … which would not only increase access but reduce costs.”

But Veazey said repeal of CON would simply add to an already high concentration of ambulatory surgery centers in areas that don’t need them and leave rural hospitals saddled with a patient mix heavily tilted toward patients without health insurance.

Georgia hospitals were forced to shell out $7.1 billion in uncompensated health care last year, up from $5 billion in 2021, he said.

“We have to serve all patients regardless of ability to pay,” Veazey said. “It’s not a level playing field.”

“Free-market approaches work for the hotel industry or restaurants,” Adams added. “Nobody is going to die if we don’t have as many restaurants in a county as we would like. … Georgia already has access-to-health-care problems [repealing] CON is not going to fix.”

This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.