Certificate of need debated: New laws could streamline approval of hospital renovations, expansions

Before Dosher Memorial Hospital in Southport, N.C. could renovate some of its older patient rooms, it had to complete paperwork, which cost the hospital more than $100,000.

But hospitals like Dosher and UNC might soon be able to bypass this tangle of red tape if a legislative committee decides to rewrite state certificate of need laws.

The committee will meet Thursday to begin discussions on how to streamline the process of approving hospital renovations and expansions.

Other hospitals have been impacted by high costs and lengthy time requirements set by the current process.

State law requires all hospitals wanting to replace or expand their facilities to apply for a certificate of need. The N.C. Division of Health Service Regulation reviews these applications and decides if these new services are needed.

Once the state has made a decision, other affected hospitals can go through an appeals process that could last years.

Rep. John Torbett, R-Gaston, said the application process is too costly and drawn-out — and hopes to make changes to eliminate some of the red tape.

Torbett, a chairman of the N.C. House committee examining the certificate of need process, said he and other legislators met this past fall with hospital officials across the state and heard their testimonies.

About 36 states had certificate of need laws as of Dec. 2009, according to the National Conference of State Legislatures.

State legislators across party lines have agreed that the process could be streamlined, but there is disagreement in the N.C. General Assembly about the economic impact of the certificate of need laws.

Some supporters of certificate of need laws have argued that the current process, though messy, keeps healthcare costs down.

“Certificate of need laws have helped prevent the medical arms races we see in places like California, Texas and Florida,” said Adam Linker, a policy analyst for the Health Access Coalition at the N.C. Justice Center, a left-leaning think tank in Raleigh.

“North Carolina has good access to health services without the high costs and inefficiencies of many other states,” Linker said.

He said certificate of need regulations ensure rural communities have the same access to healthcare as wealthier, more densely-populated suburbs.

But Torbett said he questions whether certificate of need laws actually control costs.

“I’m having a hard time wrapping my hands around the concept that government limiting open and free competition can keep costs minimal,” he said.

A policy report from the John Locke Foundation, a conservative think tank, argued that North Carolina’s certificate of need laws should be abolished entirely.

“It is just as wrong-headed to think that limiting the supply of health care equipment and facilities can reduce health care costs, as it would be to think that oil prices could be brought down with further reductions in oil production,” Roy Cordato, a resident scholar at the foundation, wrote in the report.

Torbett said the committee’s initial report, which will conclude by May, will include legislative recommendations for this year’s short legislative session.

A larger, more comprehensive report will be completed by 2013, he said.

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