TN bill would repeal laws some say limit access to healthcare; Sen. Crowe says it goes too far


JOHNSON CITY, Tenn. (WJHL)- A proposed bill in Tennessee could repeal laws that some say are limiting access to critical healthcare services.

One local lawmaker says the legislation goes too far.

Under Certificate of Need laws, providers have to seek permission from the Health Services and Development Agency before expanding their practice or purchasing certain equipment.

Acute hospital beds, ambulatory surgical centers, MRI scans, substance abuse treatment and hospice care are just five of the more than twenty services regulated by Tennessee.

According to Matthew Mitchell, a senior research fellow at George Mason University’s Mercatus Center, that’s above average for the 35 states that still have CON laws.

In the 1970s, Mitchell said the National Health Planning and Resource Development Act withheld federal funds from states that refused to adopt these laws.

He said the aim was to expand access, improve quality and lower the cost of care. “It became clear by the early ’80s that it wasn’t achieving its goal,” Mitchell said.

Since the federal statute was repealed, 15 states have followed suit and others have rolled back regulations.

The states highlighted in blue still have CON laws.
Source: Mercatus Center

If passed, Rep. Martin Daniel’s bill would phase out CON laws in Tennessee over a five year period.

“Our CON laws are some of the most rigorous and onerous in the entire nation,” said Daniel. “The economic market should determine supply and demand, not the government.”

Mitchell said the state approval process can be cumbersome for providers. He said it can take years and cost hundreds of thousands of dollars.

“Those who’re already in the market can come before the CON regulator and make the case as to why they would prefer not to have any competition,” he said. “It’s essentially designed to help the incumbent providers.”

Sen. Rusty Crowe, who serves as chairman of the Senate Health and Welfare Committee, said, “Our process is pretty darn good. I think it needs to be modified and we’re going to modify it. That’s why we’re studying it this summer,” Crowe said.

Logan Grant, executive director of the Health Services Development Agency, said a legislative working group has been trying to find a “Tennessee specific solution,” which could include lowering application fees.

Crowe said he wouldn’t support a total repeal of CON laws because it could saturate the market with services and put community hospitals at a disadvantage.

“Obviously, if we didn’t have a CON process, those rural hospitals that don’t have enough volume would be in deep trouble,” he said.

A spokesperson for Ballad Health, the only hospital system in Northeast Tennessee for which Crowe is a contracted employee, said in a statmenet:

Ballad Health serves all patients regardless of their insurance status. Certificate of Need laws have long protected the public from for-profit and other organizations cherry picking profitable services while leaving community hospitals to care for those with Medicaid or without the means to pay.

Unnecessary duplication of services leads to financial jeopardy for community hospitals. Locally, the hospitals which have historically lost money are those in communities where this duplication exists, and this also jeopardizes access to care. This is particularly true in rural areas, where hospitals have been closing at an alarming rate.  

Ballad Health cannot comment on any legislation until it can evaluate the specific impact of the proposal on access to care locally. Ballad Health has not challenged a CON application since its formation in February, 2018, nor has it taken any steps to preclude applicants from being successful with their application.” 

Ballad Health

Research shows states that have repealed CON laws have better access to healthcare, according to Mitchell.

The Mercatus Center created a profile for every state with CON laws. The above charts reflect their analysis of access to care in Tennessee.

“In states that have Certificate of Need laws, not only are there thirty percent fewer hospitals overall but there are thirty percent fewer rural hospitals as well,” he said.

Mitchell said states with CON laws also have fewer ambulatory surgery centers, hospital beds, MRI machines, hospice care and dialysis care.

He added, “And in the midst of an opioid crisis, it’s pretty amazing that we have restraints on drug rehabilitation centers.”

Mitchell said there’s no evidence that CON laws have reduced the cost of care and some studies suggest that they have increased pricing.

He said a recent study also found health outcomes are worse in CON states relative to non-CON states.

Dr. Robert Berry, a private provider in Greeneville, Tennessee, said CON laws limit patient choice.

“I’m having a lot of patients who’re going outside of the area. They’ve lost confidence in local healthcare,” said Berry.

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