The Georgia Supreme Court on Monday will hear oral arguments in a case challenging state regulations that limit access to essential health care for women and babies.
In Georgia, as in other states with Certificate of Need laws on the books, health care providers have to get permission from state bureaucrats before opening or expanding their medical facilities. In theory, these laws exist to allow the state to balance the needs of the public with the interests of hospitals and other health care providers, but in reality they often allow larger providers to veto unwanted competition.
In 2016, the Federal Trade Commission and the U.S. Department of Justice issued a joint statement calling for state governments to roll back CON laws in order to free health care markets and lower prices.
"CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers," the agencies concluded, warning that these laws have been exploited by competitors seeking to protect exclusive markets by raising the cost of entry.
That's what Dr. Hugo D. Ribot Jr. and Dr. Malcolm Barfield, owners of the Women's Surgical Center, LLC, say happened to them.
The two doctors perform hundreds of non-emergency outpatient OB/GYN surgeries every year. They wanted to add a second operating room—with the intention of renting it out to other surgeons who needed space—in order to serve more patients.
Three hospitals, including the Cartersville Medical Center, located across the street from the Women's Surgical Center, objected to their CON application. The Georgia Department of Community Health sided with the hospitals and denied the application.
The two doctors, represented by attorneys from the Arizona-based Goldwater Institute, a free market law firm, are asking the Georgia courts to strike down Georgia's medical CON laws so that licensed doctors are able to offer their services to the public without first complying with anti-competitive restraints.
Lower courts have upheld the state's CON laws, which have come under attack in recent years across the country. Many states added CON laws to their books in the 1970s, when they were mandated by Congress as part of an ill-advised effort to reduce health care costs. Congress reversed the mandate in the 1980s after the Congressional Budget Office found that CON laws often had the opposite effect on prices and the availability of care.
But more than 30 states still require medical providers to get state approval before opening new facilities or expanding existing ones. Those laws persist because of legislative inertia and because of the influence of the special interests—hospitals, mostly—that benefit from a time-consuming and bureaucratic process that blocks potential competition.
The consequences can be disastrous. In January, Reason reported on the years-long fight between two Virginia hospitals over the construction of a new neonatal intensive care unit. While the regulators were deliberating, a baby died at a hospital that had sought to build an NICU that might have saved the child. After the death, the state Department of Health still refused to grant a CON to the hospital.
The costs of CON laws aren't always obvious. In a paper published last year by the Mercatus Center at George Mason University, Thomas Stratmann and Davild Wille argue that hospitals in states with CON laws have higher mortality rates than hospitals in non-CON states. The average 30-day mortality rate for patients with pneumonia, heart failure, and heart attacks in states with CON laws is between 2.5 percent and 5 percent higher even after demographic factors are taken out of the equation.
Dumping Georgia's CON laws would allow Ribot and Barfield to expand their practice, giving women in Fulton County, Georgia, more options and greater access to non-emergency OB/GYN surgical care. If the state Supreme Court decides to keep those laws on the books, hospitals will win and women and babies will lose.