Here is what’s being considered to fix SC’s near-worst certificate of need (CON) laws

Healthcare
February 28, 2020

Lawson Mansell

Policy Content Manager

On Thursday, a Senate Medical Affairs subcommittee heard testimony on several bills to either modify or fully repeal South Carolina’s arcane certificate of need laws, or CON.

Due to CON’s outdated and prohibitive restrictions on innovation in the healthcare space, PPI has been advocating for full repeal. CON laws require medical providers to obtain special permission from the government in order to buy certain medical equipment or build new medical facilities. Providers must not only get permission from the government to purchase the equipment, but also do so in a way that protects existing providers from competition. Only in healthcare and in utilities is such monopolistic behavior not only encouraged, but rewarded!

South Carolina has a particularly restrictive CON program, which ranks 9th in the country in terms of the number of services and facilities with restrictions. South Carolina has 22 CON regulations in place, one of which requires providers to obtain a CON for purchasing any medical equipment that costs $600,000 or more.

Several of our partners in this effort were present to testify on behalf of repealing CON.

PPI’s Senior Fellow Oran Smith presented reports to the subcommittee by both the Obama Administration and Trump Administration that argue for full repeal of South Carolina’s CON regulations. (This may be the only policy position those Administrations have in common.)

One of the issues that received traction in the hearing was the question of access to care in rural areas. Supporters of CON argue that CON laws protect rural hospitals by keeping non-emergency medical facilities from competing for patients. But evidence shows that CON laws actually restrict access. Dr. Marcelo Hochman, President of the Charleston County Medical Society, has been a champion for CON repeal and presented several pieces included in PPI’s Healthcare Freedom Report to the committee:

“CON limits services and limits facilities that can be provided for those in need. This is incontrovertible evidence that access to care is worse in CON states.” 

Dr. Cleave Ham also testified in support and mentioned the other notable aspects of that same research:

“Studies show that in states that have CON laws, they have higher per capita spending and higher rates of travel for imaging services. As CON laws become more prevalent, their monopolistic and anti-competitive tendencies have negatively impacted patient care and healthcare in general.”

The bottom line? Medical providers shouldn’t have to get permission from either the government or their competitors to build a clinic, buy new equipment, or expand services.

Because there are several bills being debated, we’re optimistic that something will be done on this issue. It’s critical for patients that we remove or rewrite policies that constrain freedom in South Carolina’s healthcare marketplace in order to drive costs down and increase access.

 

Photo, left to right: Dr. Marcelo Hochman, Dr. Amy Ciancolo, Oran Smith, PhD, Dr. Shane Purcell, Dr. Sam McCown, and Dr. Cleave Ham.