health care

Virginia's Legislature Advances Bills to Reform Anti-Competitive Certificate of Public Need Laws

Virginia's failed experiment in central planning for healthcare facilities is bad for patients and should be overhauled.

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Ariel Skelley Blend Images/Newscom

A series of bills aimed at reforming Virginia's Certificate of Public Need laws for hospitals took a step towards becoming law on Wednesday. The Virginia House of Delegates could take-up the issue within the next week.

As Reason reported on Wednesday, Virginia's COPN laws give the state government control over a wide range of medical services in the commonwealth. If a hospital wants to build a new surgical facility, install a new MRI machine, or offer specialty care for sick infants, it first has to get permission from the state Department of Health. Until some minor reforms passed in 2015, hospitals had to get permission from the state just to add additional parking spaces.

That might seem comical if the stakes weren't so high. Patients lose because COPN laws, almost by definition, limit access to care—sometimes with tragic consequences, as our investigation found.

Adding to the need for reform is the fact that the COPN application process is fraught with politics and often becomes an exercise in using the power of government to limit competition. When a hospital applies to open a new facility or buy a new imaging device, for example, other hospitals in the state are allowed to object if they believe the new facility or device will compete with their own services.

"These laws provide hospital systems with a protected monopoly that works against useful health care reform and patients' choice," said Virginia state Del. John O'Bannon (R–Henrico), the lead sponsor on one of the major COPN reform bills moving through the state legislature.

His bill, HB 2337, would sunset Virginia's COPN process for a wide range of medical services—including NICUs, nursing homes, medical imaging centers, and operating rooms—in any part of the state with a population density of more than 200 people per square mile, which would include most of the northern Virginia suburbs, the Tidewater region and the Roanoke-Salem metropolitan area. The bill would keep COPN rules in place for rural areas.

That was one of several bills approved Wednesday evening by the House Committee on Health, Welfare, and Institutions.

Other bills approved by the subcommittee on Wednesday would end COPN licensing rules governing the number of beds in psychiatric facilities and would allow licensed physicians to purchase additional medical imaging equipment without first getting permission from the state.

One bill that did not get a vote from the committee is a narrow attempt to settle the controversy at the center of Reason's investigation into Virginia's COPN laws. Sponsored by Del. Christopher Head, that bill would prohibit the state Department of Health from blocking a COPN license for neonatal services solely because of objections from nearby, competing neonatal centers.

As we reported this week, an ongoing "turf war" between two hospitals in the Roanoke, Virginia, area demonstrate some of the serious, and sometimes tragic, consequences of letting the state decide what medical services are "needed." In that case, Carilion Clinic, which houses one of the largest neonatal intensive care facilities in the entire state, has repeatedly objected to applications from the smaller, nearby LewisGale Medical Center, which has since 2010 been trying to build a NICU of its own. The state Department of Health has sided with Carilion and denied LewisGale's application twice—the only two times in state history that a COPN for a NICU has been denied—citing concerns about the smaller hospitals competition with Carilion.

Head's bill is a noble attempt to right that wrong, but broader reforms that curtail or eliminate the state's role in controlling hospital's capital investments would be better. A piecemeal approach might let LewisGale finally build their NICU, but won't do anything to help the next hospital that runs into a similar problem.

Certificate of Public Need laws were created in the 1970s and 1980s under the theory that states should control medical facilities' capital spending in order to prevent surpluses of expensive medical tech and keep costs for patients down. They haven't worked. States with COPN laws (or Certificate of Need laws, as they are known in most places but not in Virginia) generally have higher costs and lower quality care.

Worse, these laws have become subject to regulatory capture and often allow politically connected hospitals to limit competition from smaller facilities.

"CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers," the Federal Trade Commission and the U.S. Department of Justice said in a joint statement last year calling for state governments to roll back CON laws in order to free health care markets and lower prices. The agencies warned that these laws have been exploited by competitors seeking to protect exclusive markets by raising the cost of entry.

Luckily, in Virginia, there's an emerging bipartisan consensus in favor of reform. Republicans like Speaker of the House William Howell (R–Stafford) have endorsed changes to COPN laws and a report compiled in 2014 by Democratic Gov. Terry McAuliffe's top health officials also highlighted the need for changes.

Within the next week, the Virginia House of Delegates could vote on several COPN reform bills, setting the state on course to follow New Hampshire and Wisconsin on the list of states to recently roll-back a failed experiment in central planning for healthcare.

NEXT: Teen Throws Paper Airplane in Class. He Was Arrested and Faces 30 Days in Jail.

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  1. Nothing helps control the price of something like having the government limit capital investment into the area. The key to keeping the price down is to strictly limit the supply of something so you don’t get over investment.

    People apparently actually believed that. Amazing.

    1. Certificate of Need laws are literally straight out of Atlas Shrugged.

      And people say she is a bad writer.

      1. Her problem was she was a bad fiction writer. She was apparently one hell of a non fiction writer and futurist. She just didn’t know it.

        1. I think she was well aware.

          1. It is her critics who thought she was writing fiction.

            1. That is because reality is so bizarre people refuse to believe it is true.

            2. Atlas Shrugged was a terrible novel, but that doesn’t preclude any level of government from using it as an instruction manual.

              1. It isn’t that bad. Just skip over Galt’s speech and you’ll be fine.

                1. But that’s the meat.

                  1. No it isn’t – the meat is the parable about how the train disaster happens. Galt’s speech is ineffective didacticism, and distracts from the actual point of the book.

                  2. Galt’s speech is 70-some pages that explicitly restate themes that were already pretty explicitly presented throughout the novel. Meatwise, it’s sort of like getting a side bucket of drumsticks with your KFC Double Down.

          2. Woke, you might say.

            1. No, I wouldnt say that.

        2. If only somebody with vision would adapt her work into something accessible to the public.

          Oh… oh.

            1. It’s turtles all the way Downfall.

          1. There’s Iron Man 2, that’s something, right?

    2. Competition leads to a wasteful and expensive duplication of services. In my area, the local hospital got okayed to build a new cardiac-care unit so that’s their specialty. If you need cancer care, there’s another regional hospital that handles that. Same with prenatal and neonatal services, renal treatments, what have you, there’s one main hospital that deals with that. It’s much more efficient that way.

      Why the town allows Kroger, Publix, Walmart, Food King, Ingles and several dozen other little shops to all offer to sell bread is beyond me. All that competition just drives the price of bread sky-high. I’ll bet if only one store was allowed to sell bread, they’d be selling it for like a nickel. Plus, since without having to worry about whether or not their customers were going to run off to some other bread store, they could afford to dedicate themselves to providing only the finest bread sold by the friendliest of clerks in the most exquisitely-appointed shop. Possibly with dancing bears and juggling clowns and bicycle-riding monkeys. See? Competition costs you the opportunity to buy bread for a nickel while being entertained by a bicycle-riding monkey!

      1. Better yet, let’s just have the government run all the stores, that way we can eliminate the profit motive and the price will be even lower! What could possibly go wrong?

  2. Excellent news.

    The price of medical services will decrease and the quality will increase with the introduction of competition. If I recall, some poor kid died due to the VA law on certificate of need.

  3. “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers,”

    I know when I’m shopping for jeans, the first thing on my mind is: I wish I didn’t have to choose from so many brands and so many stores. I wish I only had one store offering one brand.

    1. Thats why we only need one candidate for President: Bernie Sanders!

  4. Certificates of need are some of the creepiest commie crap, guaranteed to cause disaster, central command, control freak shit in this country. It should never have been a thing. The laws mandating them and the system that administers them should be burned to the ground.

    1. ^This. And I don’t know how those crept in to the Virginia Code – we used to be a conservative state.

      1. Conservative =/= free market or free anything.

        1. It reads more like Top Men syndrome than anything particularly left or right on the political spectrum. Virginia has been flooded with the toppest of Top Men, government bureaucrats and sycophants.

  5. but somehow i’ll still end up calling my state rep and sen to ask them why they’re so fucking shitty for voting against these reform bills.

  6. OT gun news…

    1. http://www.nationalreview.com/…..vil-rights

    in US v. Robinson, the 4th Circuit’s Judge James Wynn writing in concurrence:

    I see no basis ? nor does the majority opinion provide any ? for limiting our conclusion that individuals who choose to carry firearms are categorically dangerous to the Terry frisk inquiry. Accordingly, the majority decision today necessarily leads to the conclusion that individuals who elect to carry firearms forego other constitutional rights, like the Fourth Amendment right to have law enforcement officers “knock-and-announce” before forcibly entering homes. . . . Likewise, it is difficult to escape the conclusion that individuals who choose to carry firearms necessarily face greater restriction on their concurrent exercise of other constitutional rights, like those protected by the First Amendment.

    2. http://www.phoenixnewtimes.com…..03-9018654

    felon has gun rights restored. shoots/kills illegal alien who was assaulting an LEO. something for everyone there.

    1. “felon has gun rights restored. shoots/kills illegal alien who was assaulting an LEO. something for everyone there.”

      In a lot of other places that dude would be back in prison and the details of the story memory holed.

      1. The tats and piercing say incorrigible reprobate, but the rest says Ron Howard.

    2. David French? FUCKIN CUCK.

      It’s pretty astonishing that police have a criminal conviction rate “33 times” lower than their civilian counterparts, and concealed carriers are one tenth the rate of police.

      (From the article French links: Perhaps police crimes are underreported due to leniency from fellow officers, but the gap between police and the general citizenry is so vast that this couldn’t account for more than a small fraction of the difference. Yeah, I bet. Shame we’ll never put that to the test.)

      What a stupid, stupid verdict.

  7. The very first thing I did as a hospital lawyer was work on getting the Wisconsin CON law repealed. The hospital association set up a debate between me and the legislative sponsor of the CON law. I recall referring to it as “Stalinist central planning.”

    Good times, good times.

    1. That’s impressive RC. I am assuming you were successful?

      1. Yeah, it got repealed. It was a brand new law, which makes it easier. The hard part was convincing the hospitals not to go all crony and use it against each other.

    2. No “fuck off slaver”?

  8. Drunk Driving Undocumented immigrant rights activist loses her battle to avoid being deported

    “An immigration rights activist whose own undocumented status was exposed by a drunken-driving arrest has lost her six-month legal battle to remain in the country.

    Wendy Uruchi Contreras, a Virginia organizer for the immigrant rights group CASA, was deported to Spain Tuesday after last-ditch appeals were denied by U.S. Immigration and Customs Enforcement officials.

    “We are devastated,” said her husband, Giovani Jimenez, who lives in Fredericksburg, Va., with their American-born children, Alex, 13, and Lucia, 7. “My children are crying, but we know there’s nothing more we can do.”

    [She fought to keep immigrants from being deported. Now she faces the same fate]

    Jimenez said he learned of the decision last week, days before the inauguration of President Trump.”

    Definition of entitled. Arrives here illegally becomes an activist who probably spends all day talking about how evil white people are while sucking off the teat with her anchor babies. Gets a drunk driving charge and is still pissing and moaning.

    1. Spanish people aren’t white anymore? I don’t get racialism.

      1. Most people just have murky bullshit in their heads where race, culture, religion, government etc is all mixed up. Ask them to make fine distinctions and they cant do it.

        1. Actually the distinctions aren’t all that fine.

    2. My children are crying, but we know there’s nothing more we can do.

      You could start looking for a new woman.

      1. Move to Spain? Make sure to get a visa first, though, if this situation has taught him anything.

        1. Pssh, nobody wants to live in Spain. He ought to pick up some hot young Russian girl.

      2. Move to Spain?

  9. Getting rid of these CON laws, along with licensing and other local barriers to entry, are really what is needed to open a market in healthcare and get medical spending under control. Paul’s bill is a great start, I haven’t read it all, but it’s not going to do a lot of good if local markets are artificially constrained.

  10. DOOOOOOOM

    t’s now 2 ? minutes to “midnight,” according to the Bulletin of Atomic Scientists, which warned Thursday that the end of humanity may be near.

    The group behind the famed Doomsday Clock announced at a news conference that it was adjusting the countdown to the End of it All by moving the hands 30 seconds closer to midnight ? the closest the clock has been to Doomsday since 1953, after the United States tested its first thermonuclear device, followed months later by the Soviet Union’s hydrogen bomb test.

    In announcing that the Doomsday Clock was moving 30 seconds closer to the end of humanity, the group noted that in 2016, “the global security landscape darkened as the international community failed to come effectively to grips with humanity’s most pressing existential threats, nuclear weapons and climate change.”

    But the organization also cited the election of President Trump in changing the symbolic clock.

    It’s a madhouse. A MADHOUSE!

    1. How far did they move the clock when Clinton was chomping at the bit to militarily confront Russia and was widely expected to win the election?

      That’s what I thought.

      1. It is with some relief that I realized I’d read “Clinton” and thought “Former President Bill” rather than Hillary. Is the Hillary nightmare truly over?

        1. She is mulling over a run for commie mayor of NYC. They already have one of those. At least she won’t be inflicted on the rest of the country.

          1. They deserve each other. Good riddance to bad rubbish.

            1. And we get years of “Shrillary fucks up NYC, again/some more” articles, it’s the gift that keeps on giving.

        2. OMG, me too.

    2. Needless to say, this will be promoted as gospel from on high in the majority of media outlets.

    3. 3 hours for nuclear weapons, 20 hours, 57 minutes, and 30 seconds for climate change.

    4. I seem to recall them pulling this same horseshit when Reagan got elected. Maybe Bush too.

      Funny that.

    5. The modern day Doomsday Clock is completely retarded. Since 2002 we’ve apparently been closer to doomsday than during the Cuban Missile Crisis.

      1. A Democrat was president then. Duh.

        1. Actually it more has to do with the fact they’ve thrown climate change in there. So every time there isn’t sufficient enough kowtowing to the green agenda suddenly the clock drops a couple minutes. It’s the dumbest, most delegitimizing thing they could have done, so of course they abuse the hell out of it.

          1. I dont understand how they have any credibility left whatsoever. Every doomsday prediction for the last 50 years not only off the mark but not even in the ballpark. Caught lying countless times. Transparent scam that always ends with ‘give us your money’. Caught on hot mikes admitting it is a scam and outrageous statements equating humanity with a disease….

            How do they keep that shit afloat? They should all be jobless and homeless muttering to themselves in an alley somewhere.

            1. How do they keep that shit afloat?

              An adoring and sycophantic media.

    6. No worries. we gain an hour on March 12 with DST

    7. So, closer than during the Cuban Missile Crisis?

  11. O’Bannon is my delegate. About time he did something worthwhile.

  12. Butbutbut…

    That will lead to even more unbridled capitalism than we had before

  13. OT: Drew Carey’s son was filmed at an anti-Trump rally burning some shit in the middle of the street. (I am but a simple salesman, who doesn’t care to learn how to post links, so screw you).

    1. Guess he hasn’t been watching Reason TV

  14. “Last order of business, gentlemen. I’d like you to look at the Certificate of Public Need rules in front of you. Now, take your red pen and everywhere you find the word ‘hospital’ cross it out and write ‘grocery store’. Good, that should conclude our business for today.”

    1. Hey, Sparky: We need to solve the obesity epidemic somehow, right?

      1. Once it’s solved, the red pens will come out again to replace ‘grocery store’ with ‘gas station’.

        1. I nominate Sparky for Supreme Overlord. (that man has IDEAS!)

  15. everywhere you find the word ‘hospital’ cross it out and write ‘grocery store’

    If you substituted “Walmart” for “grocery store” the social justice warriors would nominate you for sainthood.

  16. Just checking here. Is a need certified based on which pile of capital needs to be protected, or whether there are people in that area with XYZ medical issue?

    One of those things seems likely to have a poor medical outcome.

    1. The former. It’s anti-competitive. Also, it prevents people from opening specialty hospitals – children’s hospitals, orthopedic hospitals, etc.

  17. Whatever reform bill they introduce on this, name it after that baby that died. That usually gets shit passed.

    1. Sorry, the “Baby Killed by The VA Legislature Act” (BKVLA, aka “Baklava-care”) is already in process and, obvious to anyone playing at home, mandates the killing of more children, not less.

      1. I shouldn’t have laughed at that, but I did

  18. No!!!!

    The Entire Senior Management Team At The State Department Just Resigned

    According to WaPo’s Josh Rogin who suddenly has no more senior level sources left at State:

    “I reported Wednesday morning that the Trump team was narrowing its search for his No. 2, and that it was looking to replace the State Department’s long-serving undersecretary for management, Patrick Kennedy. Kennedy, who has been in that job for nine years, was actively involved in the transition and was angling to keep that job under Tillerson, three State Department officials told me.”

    Then suddenly on Wednesday afternoon, Kennedy and three of his top officials resigned unexpectedly, four State Department officials confirmed. Assistant Secretary of State for Administration Joyce Anne Barr, Assistant Secretary of State for Consular Affairs Michele Bond and Ambassador Gentry O. Smith, director of the Office of Foreign Missions, followed him out the door. All are career foreign service officers who have served under both Republican and Democratic administrations.

    1. And every damned one of them knew about and covered for Hillary. Fuck them. Good riddance. The swamp is draining.

      1. See my first post below.

        1. From the Zero Hedge piece that LH linked to above:

          Additionally, “Assistant Secretary of State for Diplomatic Security Gregory Starr retired Jan. 20, and the director of the Bureau of Overseas Building Operations, Lydia Muniz, departed the same day.

          Diplomatic security guy probably knew something. Overseas Building Operations woman probably not so much.

          1. Overseas Building Operations woman probably not so much.

            How about the Benghazi “consulate”?

            1. Kennedy was also questioned during the Benghazi investigations.

    2. I know they are going to be toasted at all the cocktail parties for their “bravery”, but honestly, fuck these lifelong unelected bureaucrats whose actions have much more lasting consequences than some douchy 2 term president could ever hope for.

      1. Does anyone know if the State Dept. uses high-level contractors? Specifically, could these people effectively be hired back as contractors?

        1. The Clinton SD had a competent security contractor guarding the Benghazi consulate but fired them and replaced them with a crony startup that had no security personnel. A company rep went down to Benghazi and hired people off of the street randomly. One of them turned out to be a high ranking AQ guy. He and his buddies are the ones that opened the gates from the inside and let the attackers into the compound upon which they joined in the attack.

          Does that answer your question?

    3. OMG, what will we do?! Our long national nightmare is truly only just beginning!
      (Now how can we get all the senior staff at the EPA, DOE, ETC., to also GTFO?

    4. Hmm, from his Wikipedia page:

      “On October 17, 2016, the FBI released interviews related to the Hillary Clinton email investigation. One of the interviews alleges that Patrick F. Kennedy “pressured” the Federal Bureau of Investigation (FBI) to declassify an email from Hillary Clinton’s private server in exchange for a “quid pro quo” of placing more agents in certain countries. The FBI stated that the email’s classification status was re-reviewed and remained unchanged and denied quid pro quo accusations. The State Department called the allegations “inaccurate” and maintained that Kennedy was trying to “understand” the FBI’s classification process.”

      1. If they are no longer in active government service then congress cannot impeach them. Criminal charges still possible.

    5. Ooh, even more:

      “On June 10, 2013, CBS News reported that a memo from an official in the State Department inspector general’s office alleged that the then-current ambassador to Belgium, Howard Gutman, was ditching his security detail to engage prostitutes and to allegedly solicit sex with children, and further alleged that Patrick F. Kennedy had killed the original investigation in order to protect Ambassador Gutman and maybe others.[9] On June 11, 2013, White House Press Secretary Jay Carney confirmed that the allegation regarding Kennedy was under active investigation by an independent inspector general. On June 21, 2013, the White House announced Denise Bauer as the new nominee to be the next U.S. Ambassador to Belgium.”

    6. Wow, top civil servants are resigning. What’s next? Moving to Canada? Pigs flying?

      1. I hope the last one out remembered to turn off the lights.

        1. Even if they didn’t I would consider the extra electricity to be tax money well spent.

    7. Hmm, CNN is saying they were fired.

      1. even better.

      2. Sorry, read a bit further. They were told they were no longer needed then their resignations were accepted.

        “You can’t fire me, I quit!”

      3. Hmm. If Trump’s not careful, he might get a reputation for firing people.

      4. These are all PAS positions – presidential appointments requiring senate confirmation. It is traditional (as in, required) that these people turn in signed, but undated, generic resignation letters which the president can use any time. You often learn that this has happened when you turn on the TV in the morning.

    8. AP’s reporter says it’s no big deal:

      Matt Lee ?@APDiploWriter
      They are presidential appointees who submit resignations during every transition. Their resignations were accepted. We wrote about it y’day. https://twitter.com/thehill/status?

      11:43 AM – 26 Jan 2017

      1. Dammit. Yes, this is no big deal but the progs will work themselves up into a lather about this, just as they did when Trump told EPA to STFU for a few days while his transition team gets a handle on things.

    9. According to WaPo’s Josh Rogin who suddenly has no more senior level sources left at State

      Assume that was not supposed to be part of the block quote. If that was your’s, LH, it was brilliant. Heh.

    10. Damn, Trumps doing a heck of a job. He’s been in office all of what seven days? Jeez, I hope he keeps this up.

    11. Kennedy, who has been in that job for nine years, was actively involved in the transition and was angling to keep that job under Tillerson

      Not sure if this says more about Kennedy or more about Trump that Kennedy thought Trump might see him as a good fit for his team.

  19. I just read that WaPo thing about the exodus of petulant bitches from State.

    Oh, no. How will the nation survive?

  20. “Oh no, br’er bureaucrat! Don’t go outside the briar patch!”

  21. OT: Right above the CNN post about the State Dept clearing out is a picture from the Philadelphia protest. A couple of signs in the picture:

    “Health care is a Human Right”
    “We are ALL a pre-existing condition”

    1. Well, one of those signs is correct…

    2. From the cradle to the morgue in one easy step.

      1. + 1 Julia

  22. From the National Conference of State Legislatures’ page on CON laws:

    The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Bigger institutions generally have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual need or demand.

    1. CON programs originated to regulate the number of beds in hospitals and nursing homes and to prevent purchasing more equipment than necessary. Mandatory regulation through health planning agencies determined the most urgent health care needs, contributed to solutions for these needs and attempted to manage the fluctuations in prices often found in a competitive market. The intent was that new or improved facilities or equipment would be approved based primarily on a community’s genuine need. Statutory criteria often were created to help planning agencies decide what was necessary for a given location. By reviewing the activities and resources of hospitals, the agencies made judgments about what needed to be improved. Once need was established, the applicant organization was granted permission to begin a project. These approvals generally are known as “Certificates of Need.”

      1. I’m sure central planning is gonna work out great this time, unlike all the other times it’s been done.

        1. The rationales presented in in favor of CON laws are just retarded. More examples of the “but healthcare is different!” attitude to basic economics – without CON laws, unnecessary hospitals will spring up because and cause healthcare inflation because…

          1. WHAT PART OF ‘BECAUSE’ DONT YOU FUCKING PEONS UNDERSTAND?!11onreoneone

            1. I heard Dorothy said that in some apocryphal clip from The Wizard of Oz.

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