A Charleston Gazette article recently discussed a new report issued by the Department of Justice and Federal Trade Commission addressing and arguing against the need for state regulatory process such as as the certificate of need process in West Virginia. The report argues that state regulatory processes do not control health care costs, provide greater access to health care and instead discourage competition. Officials in West Virginia disagree with this conclusion because it fails to recognize the limited health care resources available in rural states like West Virginia. The positions taken on this issue revolve around the age old question of competition vs. regulation and which is better at serving the needs of the public.
Below is a copy of the Gazette article:
If a hospital in West Virginia wants to add more beds, build a new wing or start offering open-heart surgery, administrators must first get the OK from state regulators. A new report from two federal agencies recommends West Virginia and other states think about scrapping that system.
The report, jointly issued last month by the U.S. Department of Justice and the Federal
Trade Commission, argues that the regulations don't control health-care costs and discourage competition. The state's chief health-care regulator and some local hospital officials disagree. They say the report ignores the limited health-care resources and rural nature of West Virginia, as well as the state's existing rate-review process for hospitals.
"I just think that would be a formula for disaster," said David Ramsey, president and chief executive officer at Charleston Area Medical Center, about the prospect of letting hospitals expand as they wish.
Hospitals often use profits from services that make money - such as outpatient imaging and surgery - to pay for those that don't. Without the state's regulations, some hospital administrators worry specialty facilities will crop up to offer these money-making services,
leaving hospitals no way to recoup their losses.
The report's authors conclude regulations like West Virginia's stifle competition by allowing providers to block others from entering markets. The state's rules allow providers to oppose proposals by competitors. But Sonia Chambers, chairwoman of the state's Health Care Authority, said access to health care is a bigger concern than competition in many
rural parts of the state. "There aren't very many places in West Virginia where you can have
competition in health care," Chambers said.
Steven Summer, president of the West Virginia Hospital Association, said the report does not take into account the high percentage of state residents covered by government insurance programs, such as Medicare and the Public Employees Insurance Agency. These programs pay hospitals less than private insurers.
Steve Dexter, president of Thomas Memorial Hospital, worries that without regulation, specialty hospitals would cherry-pick the few privately insured - and profitable - patients. Hospitals like Thomas would be left to care for the uninsured and those covered by government
insurance programs, Dexter said.
Administrators at the South Charleston hospital waited 15 years through several different applications before state regulators allowed the South Charleston hospital to open a cardiac catheterization lab. But Dexter said he isn't ready to get rid of the state's current review process.
"The state is trying to put a rational system in place," Dexter said. West Virginia's rules, which have existed in some form since 1977, require health-care providers make their case to regulators before making large capital improvements, such as buying new equipment or
Providers must show the services are needed, consistent with the state's
health standards and financially feasible. Chambers said lawmakers and governors have periodically reviewed how the state approves new health-care services and they have yet to change how the authority decides what projects to approve or reject. "I think that every governor and Legislature has determined the [certificate of need] process is working," Chambers said. The release of the 360-page report comes one month after the U.S.
Department of Justice alerted three West Virginia hospitals they were being investigated for possible antitrust violations.
Bluefield Regional Medical Center, Princeton Community Hospital and CAMC learned in June federal officials were investigating the hospitals' partnership to offer open-heart surgery in Bluefield. The state Health Care Authority, which has encouraged hospitals to work
together to offer services, gave its blessing to the hospitals' proposal
in August 2003.
Thirty-five other states and the District of Columbia have some type of
regulatory review when health-care providers wish to expand.