The Federal Trade Commission (FTC) is pushing for North Carolina’s Certificate of Need (CON) program to go under the knife.
In a statement issued last week, the FTC endorsed HB 200, a bill filed by the House that proposes to narrow the scope of Certificate of Need (CON) review by eliminating the need for diagnostic centers, ambulatory surgery centers (ASCs), operating rooms, and psychiatric hospitals to gain prior authorization from the state before being built or expanding.
CON laws may further harm competition because competitors may take advantage of the CON process to protect their market share.
For instance, an incumbent firm may file challenges or comments to a potential competitor’s CON application merely for the purpose of thwarting or delaying competition. As noted in the FTC-DOJ report, Improving Health Care: A Dose of Competition, existing firms can use the CON process "to forestall competitors from entering an incumbent’s market."
The FTC seems to suggest that the House should take further action by completely repealing centralized planning for ambulatory surgery centers (ASCs). The written legislation exempts these same day surgery centers from needing state approval only in counties with populations above 100,000 as a way to protect fragile rural health care infrastructure. At face value, this provision seems to make sense. However, I’ve written before how a complete CON repeal may not necessarily burden already struggling rural health care facilities. The House bill’s population threshold for ASC establishment could counter-intuitively hinder better access for patients in rural areas.
The FTC seems to agree:
We also note that Section 7(f)(4) of HB200 requires ambulatory surgical facilities seeking licenses to operate in counties with populations under 100,000 people to obtain written support and a written transfer agreement from each hospital located within the county. Although we recognize that this provision may be intended to ensure access to care and patient safety, it also could be improperly used by incumbent hospitals to block a potential competitor’s license. We respectfully encourage you to consider whether there are other ways — less prone to anticompetitive manipulation — to achieve access and patient safety goals.
Removing CON will by no means solve health care’s complexities, but it can certainly inject a bit more supply competition in the industry. Just ask Uber:
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