First, Do No Harm: Analyzing the Certificate of Need Debate in North Carolina

Executive Summary

Much of the debate over Certificate of Need laws has focused on market theories instead of measurable realities. In this report, Ascendient seeks to expand the perspective beyond a one-dimensional ideological view and get back to the numbers that matter.

Based on an analysis of facts and objective data, we conclude that any move now to deregulate North Carolina’s healthcare system by reducing or eliminating the CON program would be premature and put already vulnerable hospitals at much greater risk as new entrants pick off their best patients without taking up the burden of indigent care.

Among our key findings:

  • CON regulations have not restricted the development of Ambulatory Surgery Centers (ASCs) in North Carolina. There are 44 ambulatory surgery centers in the state today—just three more than in 1996. But CON cannot be blamed, as the state’s regulatory agencies authorized 72 unique ASCs over the last 20 years, proving that market forces—not regulations—are limiting growth.
  • North Carolina residents have ready access to regulated healthcare services. Based on current utilization, there is no evidence that North Carolinians are going without needed care. The additional hospital bed, MRI, or ambulatory surgery operating room capacity suggested by anti-CON advocates would be expensive and unnecessary. Economic disparities—not capacity deficits—drive access issues; there is no incentive to compete for uninsured patients.
  • States with CON show greater access to hospital care for the uninsured. The vast majority of patients in financial need do not need ambulatory surgery. The poor and underserved seek care at emergency rooms, delivery rooms, and primary care physician offices. House Bill 200’s charity care requirements will not address these patients.
  • Cost comparisons between CON and non-CON states are muddy at best and cannot be used to argue conclusively for or against CON. Among the 36 states with CON laws, there are huge variations in enforcement, timing, triggering levels, political goals and the number of services regulated by CON. There is no statistically significant price difference—inpatient/outpatient adjusted price per patient discharge—between heavily regulated CON states and non-CON states.
  • Higher healthcare spending in CON states is likely driven by differences in population health. Heavily regulated CON states have a statistically significant higher rate of disease—such as cancer, COPD, and cardiovascular—than non-CON states.
  • Competition is not the solution for all the problems with American healthcare. The Bush-era FTC/DOJ report (2004) is cited often as a justification for reconsideration of CON programs, but it also concluded that increased competition would only succeed in conjunction with new payment methods to align provider incentives with patient interests.
This is a 20-page report. To continue reading online in a full-screen view, please click here. To read or download the PDF version, please click here.

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