A story on the Magnolia Tribune website asks if Mississippi’s “Certificate of Need” laws are hurting the state’s health care system by unfairly restricting competition.
These laws, which require state approval for new medical facilities to open, may need to be reviewed and even changed. But sometimes what looks like protection of existing businesses serves a positive purpose, too.
Certificate of Need laws date back to the 1970s. The federal government wanted to encourage medical investment and reduce health care costs, but the Tribune reported it didn’t work. In the 1980s the program got repealed in Washington and went to the states to manage.
The website quoted an occupational regulation scholar who said several states have eliminated the laws, while others have cut them back. A Mississippi opponent of the laws said those states have better health care options at a lower price. The story did not elaborate, but it would be interesting to know how those states compare with Mississippi’s low per capita income and poor health statistics.
In Mississippi, the Certificate of Need laws generally apply to the construction or expansion of hospitals, long-term care facilities, nursing homes, home health agencies and dialysis units. Dr. Daniel Edney, Mississippi’s state health officer, said the laws are designed to ensure that a community has enough patients to support a new medical business, and also that the applicant has the financing to do what it proposes.
The laws can be misused. An existing health care provider can oppose an application for a new facility, often in an effort to prevent competition. State regulators also can deny an application. Either of these can lead to long delays that get expensive if the issue winds up in court.
If memory serves, this occurred many years ago when Jackson hospitals opposed plans by Southwest Mississippi Regional Medical Center to open specialty facilities in McComb, mainly because it would cut into Jackson’s business. Fortunately, Southwest won approval, and today this part of Mississippi has more comprehensive health care through facilities that provide cancer treatment and heart care.
Edney sees ways to improve Certificate of Need laws. One is to have the objector pay any legal fees instead of the applicant. Another is removing the requirement to apply for permission to expand an existing facility. He said the state also needs to encourage more prenatal care, labor and delivery, postpartum care and, in a different field, psychiatric care.
Edney’s concern, and the main reason that some sort of regulatory activity needs to be in place, is that a for-profit medical company could come into a small town and provide only the services that make money. If such “cherry picking” was allowed, a hospital that provides more services would take the hit, putting its entire business at risk.
There is no way that would help. It would be the exact opposite. The larger facility could either “compete” by eliminating money-losing services, or eventually it would have to shut down.
Hospitals in Mississippi are having a bad enough time financially, and it would be senseless to put these institutions at risk of closure. Small-town hospitals already have competition: McComb residents can go out of town for medical care, and people from other areas can come here.
Less regulation of medical services sounds like a good idea for maybe three or four large markets in Mississippi. But until hospital finances are stable, and until public and private insurers reimburse the actual cost of care, Mississippi should leave the small towns out of it.
