How D.C.—and 16 Other States—Hurt Patients in the Name of Protecting Them

"Certificate of Need" rules needlessly restrain competition in the health-care industry.

(Page 2 of 2)

Asked if 49 applications in five years might indicate a market opportunity that is not apparent to SHPDA, Department of Health (DOH) spokesperson Mahlori Isaacs said, “The people applying cannot determine the need…. [SHPDA] knows if there’s a need or not just based on how we work with the community and the organizations that we’ve already given a CON.”

It’s not clear, however, that community input plays much of a role in SHPDA’s decision-making. Lamar submitted 30 letters of support from long-term-health advocates, local health professionals and clients, and even city health workers—and was rejected. Kennedy Care, another rejected home care applicant, provided letters of support from the local Advisory Neighborhood Commission (a neighborhood association that voices neighborhood concerns to city government) and from Councilman Harry Thomas, Jr. 

Spurned applicants can appeal to an administrative law judge, and Melanie Lamar did. But the judge sided with SHPDA, finding that Right at Home failed to “quantify its proposed patient base” and that “the military institutions did not indicate the number of patients who would need the proposed services or commit, in writing, to referring patients to the proposed agency.”

Quantifying a patient base does not satisfy SHPDA, however. In 2009, M.J. General applied for permission to care for 75 dual-diagnosis patients who have mental disabilities accompanied by medical issues. A director in the city’s Department of Mental Health identified 205 such patients that needed care and were not receiving it. Nonetheless, SHPDA determined there was no need for M.J.’s services.

A different administative judge ordered SHPDA to issue M.J. a CON last year—an order SHPDA appealed and lost. M.J. became the only agency to receive a CON over SHPDA's objections in the last five years—and it took three years of administrative hearings and litigation.

So what does pass muster with SHPDA? One successful applicant had been operating for decades (apparently without a CON) and was already providing care to hundreds of patients. Second, a children's hospital got the OK to start its own home care agency because it found existing ones were inadequate. And the third specializes in refilling an implanted spinal device that administers neuromuscular relaxant medication to chronically ill patients.

According to Dr. Ernest Brown, who supported Lamar's application, the lack of competition means existing providers do not have to provide high-quality service. “Here I have a patient who needs care, but I find that the quality of the care is poor,” says Brown, a Howard University-trained family practitioner who started a nonprofit, Health Care for the Home Bound, to provide house calls in underserved areas of the district. ”I think when you don’t have a competitive market, people don’t try harder. It’s a lock on the system for poor performance. There’s no incentive.”

D.C.'s certificate-of-need requirement for home health agencies has tripped up nearly 50 businesses in the last five years—and perhaps more that did not even bother to apply. The requirement does little to protect patient health and safety, as doctors, nurses, and therapists already must be licensed and board-certified in their specialties. If the requirement was abandoned, patients would have more health care options. And Melanie Lamar would be free to work in the occupation of her choice.

A 2010 push from a working group of home care providers and health advocates to scrap the CON law for home health agencies fizzled for lack of interest from City Council members. However, DOH officials are currently rewriting the city's health licensing rules, including the CON requirement. Community health activists say those deliberations are taking place in secret, so no one outside the DOH knows if the intent is to ease or strengthen entry barriers.

Legislators elsewhere in the country are considering relaxing CON laws: Maine might eliminate the CON entirely. A pair of bills in Washington state would eliminate the certificate of need for an array of services, including home care. A bill in Mississippi would lift the state's moratorium on new home care agencies. And Tennessee's rules are the subject of a sunset review this session to determine if the regulations are still needed.

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  • $park¥||

    Whoever came up with the idea of certificates of need was pure genius.

  • Brett L||

    Nice business you have there. As long as the right consultants can dip their beaks, you can come into the area. Unless the existing entities have better bribes.

  • Virginian||

    So how many people has this madness killed?

  • Baal||

    ^ this.

    The nice folks at the Illinois Health Facilities and
    Services Review Board recently decided that the largest city in
    my county (Crystal Lake in McHenry County) doesn't actually need
    hospital *in town*. The next town over should darn well be good
    enough.

  • Jordan||

    Hmm, my econ 101 is a bit rusty. What happens when you simultaneously restrict supply and subsidize demand? Something to do with prices. Help me out here.

    More evidence that our completely free, unregulated, wild-west healthcare system is a failure.

  • Brubaker||

    You're confused. The problem isn't "our completely free, unregulated, wild-west healthcare system." Quite the contrary, the problem is an overbearing government presence that is grossly distorting the market.

    It isn't the free market that's demanding "certificates of need" and restricting the supply of providers; that debacle is brought to you courtesy of "we're here to help" government.

  • ||

    Do you own a sarcasm detector? They're pretty handy.

  • ||

    They go down, because you institute wise cost-control measures. Duh.

  • ||

    Yes, you can hold down healthcare costs by reducing supply. Brilliant.

  • Jordan||

    Seriously. I knew Congress was filled with complete economic ignoramuses, but this just goes way beyond that. How the hell could anybody have believed this would lower prices?

  • Tonio||

    It's not clear to me that Congress is involved. DC City Council is perfectly capable of being stupid all on their own.

  • buybuydandavis||

    How could anyone believe they thought this would lower prices?

    Why would they want to lower prices in a sector of the economy over which they have so much control? Where's the mileage in that for *them*?

  • NoVAHockey||

    Medicare is basically do thing with medical equipment suppliers. they're dropping like flies. small companies - 50 to 100 employees, just folding up shop.

  • NoVAHockey||

    - doing this --

  • Bill||

    And don't forget the "wasteful duplication" meme, otherwise known as competition.

  • Brandybuck||

    Unfortunately I think the idea of "certificates of need" is here to stay. It fulfills the needs of many statists, from those who masturbate to the idea of more bureaucratic forms, to those that get off on telling other people what to do, to the businessmen wanting to get rid of competition, and to the true believers who think markets need to be managed by true believers to make them operate more efficiently. Countering this idea is going to be a bitch.

  • Raston Bot||

    OT.

    In the immortal words of Matt Hendricks, "Fuck you, Cookey, you motherfucker."

    http://aol.sportingnews.com/nh.....a-senators

  • KDN||

    I didn't watch the video, but the majority of the hockey watching populace is giving Cooke the benefit of the doubt, though he has done little to deserve it.

    Feels like Beckel's elbow to Crosby all over again, except Cooke is a bigger villain than Beckel could ever be and most people actually like Karlsson instead of just respecting his skills.

  • KDN||

    *Steckel. I'm retarded.

  • Raston Bot||

    I would give anyone else the benefit of the doubt. Not Cooke.

  • Bardas Phocas||

    Really, WHO needs 28 home health care providers? I think SEVEN is the correct number of provider necessary for all needs.

  • ||

    I overrule thee and declare SIX to be the correct number.

  • Night Elf Mohawk||

    The number of the counting shall be three. Five and, by extension, six are right out.

  • ||

    Then, once the nubmber three be reached, thou shalt smight thy foe who once benefited from consumer surplus with an iron fist, and they, being naughty in thy sight, shall snuff it.

  • Night Elf Mohawk||

    Maybe we could use, say, money as certificates of need. If the new place gets enough, it will stay. If it doesn't, it won't.

  • Jordan||

    NEEDZ MOAR CENTRAL PLANNING

  • ||

    There you people go with that supply-demand crap again. We must destroy nasty, nasty wealth. It must be squandered. Let noone have it.

  • sarcasmic||

    I can't think of a better way to stimulate economic growth than to prohibit economic activity and competition.

  • R C Dean||

    Let's not forget, if you happen to have a powerful political ally, like, say, a union or two, who will get to participate in your facility, it can't hurt.

    Conversely, if you happen to have a powerful political organization that would like to participate, but isn't, well, that can't help, either.

  • Tonio||

    And a minor point of information, John K. Ross: The proverbial red tape was a narrow cotton ribbon which was used to bind (tie) stacks of paper documents to keep them together. This went out of use before the invention of cellophane tape.

  • Pain||

    A similar thing happened to my Dad's practice. They wanted to get a CT machine on premises to help with diagnosis as many of their patients were old and going back and forth between his practice and the hospital was problematic and time consuming with the wait times.

    They were blocked by the local board of hospital bureaucrats who wanted them to justify why they needed it. Of course the real reason was they would be stepping on other doctors' and hospitals' turf and undercutting them. Can't have that now.

    Most people don't realize these boards even exist. It's one of the first things I'll throw in someone's face when they bitch about out "free market" health care system.

  • ||

    “It’s like you saying to a certain extent that you have enough doctors in the District of Columbia so you won’t license any more doctors,” says Eric Walcott, executive director of the D.C. Home Health Association, a trade group. “You can’t do that really."

    Sure they can. See: taxi, medallion.

  • Anomalous||

    When did DC attain statehood?

  • buybuydandavis||

    “It’s like you saying to a certain extent that you have enough doctors in the District of Columbia so you won’t license any more doctors,"

    Ronnie strikes again! Ronnie talked about exactly this as the lunatic fringe wacko he was in 1964 with the "A Time for Choosing" speech. Such crazy talk!

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  • jili5||

    It's bad enough that we license doctors. The AMA has the entire medical profession on lockdown. My grandparents can't find a decent doctor so they just end up seeing the mainstream quacks that have them drugged up on antidepressants and everything else they don't need. I hope some people start practicing medicine without a license and that good sheriff's will protect them.

  • Grenator Bole||

    "'Certificate of Need' rules needlessly restrain competition in the health-care industry."

    Well, all of you who agree with this statement don't know jack shit about our healthcare industry. I've worked as a healthcare lawyer and consultant for a number of years and my father was a hospital administrator for about twenty years. We've seen firsthand what happens to healthcare costs when "entrepreneurs" enter healthcare. Healthcare in the US is not like any other industry because the majority of it is funded by Medicare and/or Medicaid. So "increased competition" does nothing to slow down costs when you have a single payor that is the government and which has endlessly deep pockets. If 100% of healthcare was paid for by the patient, then this concept would apply. But that's simply not the case in this country.

    Seriously, those of us who are sick of the outrageous healthcare costs have been preaching that we should go back to certificates of need, or some other way to limit the entry of new providers. It's precisely the huge increase in providers, who literally create their own bills with the stroke of a prescription pen, who are driving up the cost of healthcare. This country needs fewer providers, not more. If you doubt me, just look up FQHC grants and you'll start to see what I mean.

  • Grenator Bole||

    I should note that the hospitals I and my father worked for were owned by the community, not entrepreneurs. Everyone was paid by salary and nobody had ownership stakes in the company. I know a LOT of healthcare entrepreneurs who make MILLIONS of dollars a year and you know who their facilities bill for those dollars? MEDICARE AND MEDICAID.

    Like I said, American healthcare is NOTHING like taxi cabs, hot dog stands or shopping centers. It entirely lives and dies on Medicare and Medicaid reimbursements. If you were to spend some time reading the federal register like I have, you would see the government studies which showed that privately owned psychiatric units, for example, charged the government SIX TIMES the rate charged by community-owned hospitals. And CMS wisely blew up CMHCs because they were one of the worst offenders.

    Private healthcare providers have a profit motive to increase revenues and thus profits. This means they continually seek to increase the services it bills CMS for such as by ordering more services and getting more patients in the door. I know because I spent a lot of my time figuring out legal ways to do this type of "marketing," ahem, I mean "community education."

    The simpleton laws of competition, supply and demand do not apply to an industry where 1) the fees for the services are not borne by the one receiving the service, 2) there is an unlimited demand for those services, and 3) the payor has an unlimited ability to pay.

  • Mainer2||

    "1) the fees for the services are not borne by the one receiving the service, 2) there is an unlimited demand for those services, and 3) the payor has an unlimited ability to pay."

    Well, yes. Me thinks there is a solution lurking

  • nomoss||

    Grenator Bole - You talked about costs but didn't mention quality. I've experienced health"care" in a small European country. Taxes are high, and medical services suck. Treatments are not up to date. Equipment is not up to date. Prescription medicines are not up to date. Facilities have closed. People suffer and die due to medical rationing! Good doctors leave (or are impotent). Bad doctors stay forever. I HATE public healthcare. The overlords keep costs down by denying services, by killing off patients, by prescribing crap medicines at best, etc. What the state calls healthcare is NOT what I call healthcare. I don't know enough about economics (at this point) to address the points you made. But the quality of care has to be part of the discussion.

  • Grenator Bole||

    I agree with you totally nomoss. I hate the US government and want it completely out of healthcare. That's the only solution. But that's not what we currently have.

    We currently have a bipolar government as the insurer who simultaneously encourages more providers to enter the market all the while it withholds payments to the providers who bill it. If you have ever worked inside the healthcare industry, you know what I'm talking about. It's just idiotic. So yes, the government has f'd up healthcare and caused us to have 1) the highest healthcare costs in the developed world with 2) some of the worst outcomes in the developed world.

    Reason, just hire me as your healthcare "expert" and I can set this shit straight for everyone. Because nobody else has the first clue of how American healthcare operates, the folks at CMS and Pennsylvania Avenue included.

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  • Nuked||

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    says Eric Walcott, executive director of the D.C. Home Health Association, a trade group. “You can’t do that really. No one ought to have the ability to do that. The marketplace will dictate that—if, in fact, doctors are not receiving enough clients. What will they do? They’ll go where they can find the opportunity.”

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