CON laws help hospitals, but they hurt patients

In his recent State of the Union address, President Trump pointed out that although progress is being made on a variety of health care issues, health care costs are just too expensive for the average American.

One reason is this: Hospitals are the most expensive delivery point in the health care system, and ironically, an increasing amount of medical care is being directed there. Complicating this issue is that no one can be sure how much a hospital will charge.

Two patients can receive identical services and leave the hospital with vastly different bills. Furthermore, because of bizarre payments by insurance companies, care in the hospital can cost five to 10 times more than care by the same doctor in an outpatient setting not owned by the hospital.

Due to high deductibles and co-pays, patients now are increasingly responsible for larger portions of their health care costs. The escalating cost is due to the “fat” in the system and the greed of the special interests involved, which provide little or no value in the actual health of patients.

Hospital bureaucracy has become so bloated that it takes an enormous amount of money to support it. The number of hospital administrators, for example, has increased by greater than 3,000 percent over the past 30 years, while the number of doctors has only doubled, according to the Bureau of Labor Statistics.

The best way to drive down health care costs is with competition. Unfortunately, that is very difficult, because 35 states and the District of Columbia have what are called Certificate of Need (CON) laws. These laws call for state regulators to approve the opening of any new or expanded health care services.

The CON laws vary in scope in each state, but typically govern hospitals, ambulatory surgery centers, imaging centers and laboratories. The troublesome issue with CON is that hospitals within an area can use the regulatory system to block competition and keep competitors out of the local market. Unfortunately, Georgia has had a CON law in place since 1979.


CON laws not only hurt patients’ wallets. They can actually kill the patients.

At LewisGale Medical Center in Salem County, Virginia, in 2016, a premature baby died because the hospital did not have a neonatal ICU nor an ambulance to transfer the baby to the nearest hospital with an NICU – Carilion Hospital, 6 miles away. Carilion had a neonatal transport unit, but it was unavailable.

LewisGale had tried on numerous occasions to open an NICU, but the effort had been blocked by Carilion. LewisGale also had tried to purchase ambulances, but that, too, is controlled by the CON process in Virginia, and local ambulance companies blocked the attempt.

Here in Georgia, two Cartersville gynecologists operate a small practice with a single operating room. They pioneered an outpatient technique for hysterectomies that is better for patients and costs far less than the hospital procedure. The demand for this service became so great that the doctors wished to expand their center to two rooms, but they needed a CON. Three nearby hospitals stopped this from moving forward.

The majority of surgical cases in our country are performed as outpatient procedures. When they are done in the hospital, the cost of these procedures can exceed $100,000, as in the case of joint replacement surgery and other complex surgery. Patients with high-deductible insurance and large co-pays may be responsible for $20,000 or more for these types of operations. Unable to afford these staggering sums, with or without insurance, some patients choose to go abroad to get these operations for a fraction of the cost. The problem is that the quality overseas is unknown and the risks may be great.

The Surgery Center of Oklahoma in Oklahoma City has successfully tackled this problem, offering an entire menu of outpatient procedures, performed by board-certified surgeons, in an accredited center at 1/5 to 1/10 the cost of the identical procedure at the hospital down the street. Their outcomes and patient satisfaction scores are superior to those from the hospital. A center such as this would not be possible in a state with CON laws, because it would never get by the hospitals.

Now that the Georgia Legislature has two bills before it to consider abolishing CON in the state, it should examine this issue not in the light of who has the most powerful and most influential lobby. We all know that hospitals have an army of lobbyists to advocate for the status quo.

Instead, lawmakers should put the doctor-patient relationship first. And if that’s the case, then there is no longer a need for a law that restricts doctors from providing patients with the best care possible, at the lowest cost. Caring for patients also means looking out for their financial well-being. Improving patient outcomes is not only good for patients but for taxpayers as well.

Dr. Hal Scherz is the founder of Docs 4 Patient Care and president and managing partner of Georgia Urology. He serves on the healthcare advisory board of the Heartland Institute and the Steamboat Institute.