New Georgia Law Allows Birthing Centers To Open Without Needing Permission From Nearby Hospitals

Certificate of need laws were supposed to ensure high-quality health care in rural places. Instead, they allowed hospitals to veto potential competitors.

When Katie Chubb tried to open a new birthing center in Augusta, Georgia, nearly three years ago, she hit an unexpected roadblock.

The problem had nothing to do with the trained nurses and physicians that Chubb planned to employ at her Augusta Birth Center. It wasn't that she couldn't find potential patients. And it wasn't—as is sometimes the case—that the state of Georgia said there was no "need" for her services. In fact, the Georgia Department of Community Health, which has authority over those decisions in the state, ruled in December 2021 that her clinic would "enhance the delivery of health services by offering a low cost, high quality alternative for perinatal health care service."

But the department denied Chubb's request for a certificate of need (CON) license anyway, because three hospitals in the region refused to sign forms allowing Chubb's new birthing center to compete with them, as Stateline reported in an excellent feature story last year.

Now, finally, Chubb (and the future parents of Augusta) are free from the hospitals' ability to veto prospective competition.

Georgia Gov. Brian Kemp, a Republican, signed a bill last week that significantly overhauls the state's certificate of need rules to ease the regulatory burden facing health care entrepreneurs like Chubb. The changes stand to benefit a wide swath of the state's health care providers—as well as patients—by reducing review periods and exempting some services, including substance abuse centers, psychiatric facilities, and free-standing birth centers like the one that Chubb hopes to open.

Those regulatory rollbacks do not mean that Georgia health care facilities will be subject to less scrutiny when it comes to the care they provide. As in other states, Georgia's certification of need laws are purely economic regulations—they have nothing to do with ensuring patients receive quality care. All they do is allow state officials to decide where and when new services can be offered or new facilities can be built—a process that hospitals and other established health care providers often twist toward anti-competitive ends, as Reason has covered extensively.

"Today is a momentous day for Georgians across our state who will soon have greater access to health care and personalized treatment," Tony West, state director for Americans for Prosperity Georgia, which has been advocating for CON reforms, said in a statement. West praised Chubb's "passion, knowledge, and commitment" to the effort, calling it a "key factor" in getting lawmakers to pass the reform bill.

In a statement, Kemp said the changes he signed into law would help ensure that "Georgians in rural parts not only have access to good paying jobs, but also quality and affordable health care." He said the changes will "lead to more doctors, dentists, and mental health professionals serving our rural and underserved communities."

Kemp's comments deserve to be underlined because they highlight one of the many problems with CON laws. Giving states more power to regulate where health care services are "needed" was originally intended to help rural communities. Without central planning, there was fear that hospitals and other health care providers would congregate in cities and suburbs, leaving residents of more far-flung areas with less access.

In practice, that hasn't worked out. In fact, research shows that states with CON laws on the books have fewer rural health care facilities per 100,000 people than those that do not.

That's part of the reason why Chubb was motivated to open a birthing center in Augusta. She and her husband had to drive over two hours to the nearest birth center when her sons were born.

Unsurprisingly, reduced access to health care equates to poorer health outcomes. Georgia has some of the highest infant mortality rates in the country, and the rural parts of the state fare even worse. Rather than benefitting residents of rural areas, CON laws have granted pseudo-monopolies to the hospitals that do exist in those places, allowing them to reject potential competitors and leave patients with fewer options.

When a policy isn't working as intended, it ought to be scrapped. There is still more work to be done to fix Georgia's (and other states') CON laws, but kudos to Kemp and Georgia state lawmakers who took this significant first step and let Chubb aid the next generation of their state's residents.