Report: South Carolina CON laws have cost hundreds of millions in medical investments

October 11, 2021

PPI Senior Fellow Oran Smith is quoted in this article from The Center Square.

(The Center Square) – South Carolina’s certificate of need (CON) process either delayed or ended $455 million worth of potential health care investment in the state between January 2018 and February 2021, according to a new report from the Americans for Prosperity Foundation (AFPF).

CON laws require a health care provider or hospital to go through an approval process to prove the added services are necessary in an area. The laws were created in the 1970s with the idea that having too many empty hospital beds or unused medical equipment ultimately would cost patients more money, having to pay for services and unused equipment.

Studies such as the AFPF study, however, show there is a cost to the process that can lead to delays, added expenses and lengthy court battles.

It took more than a decade of legal battles to get a hospital approved in two South Carolina cases. Construction began earlier this year on Piedmont Medical’s Fort Mill Medical Center after a 15-year process.

“It’s no secret that South Carolina consistently ranks at the bottom of health care rankings in the U.S.,” AFPF State Director Candace Carroll said. “As dedicated parents and caregivers, we need to do all that we can to make our voices heard and fight against these barriers to health care. Every person deserves to have access to quality, affordable health care, regardless of where they live. For the sake of citizens across the state the well-being of our families must be prioritized over crony profits.”

South Carolina Legislative Audit Council Director Earle Powell confirmed in August his group would conduct an audit of CON legislation after 13 South Carolina state senators signed a letter requesting a review. That group included Sen. Wes Climer, R-York, who sponsored legislation that would repeal CON regulations, along with Senate President Harvey Peeler, R-Cherokee; Majority Leader Shane Massey, R-Edgefield; and Dick Harpootlian, D-Richland.

 “The people of South Carolina are hurting because there is less care available and it’s more expensive and there is even the question of quality as well,” Palmetto Promise Senior Fellow Oran Smith, the think tank’s CON expert, said with the hope the audit could be complete for the 2022 legislative session. “One of the reasons for this is a provider of health care being forced to seek the approval of their competitors.”

The AFPF report looked at CON laws in South Carolina, Michigan, Iowa and Virginia and found CON laws have resulted in nearly $1 billion in lost health care investment in the four states since 2016.

report from The Mercatus Institute estimated there would be nine more hospitals in rural South Carolina without the laws.

“Providers and industry leaders in South Carolina, and even administration officials from the last two presidencies, have called out the shortcomings of the state’s CON program, which fails to increase access to, improve the quality of, and reduce the costs of health care,” AFPF’s report said.

The report showed CON decisions take 134 days, on average, and applications cost an estimated $5,787 apiece.