2014 legislative session

Lawmakers to battle over health care again

abeam@thestate.comJanuary 5, 2014 

— Republican Gov. Nikki Haley’s veto of a key regulatory program has not stopped health care providers from moving forward with 69 projects that previously would have required state approval.

Since the Department of Health and Environmental Control suspended the state’s “certificate of need” program in July, health care providers have filed license applications for those projects, which previously would have required regulatory approval. Those applications came despite warnings from the S.C. Hospital Association that DHEC’s suspension of the certificate-of-need program would put on hold up to 32 projects worth $96 million.

“The sky didn’t fall,” said Senate Majority Leader Harvey Peeler, R-Cherokee, and a critic of the certificate-of-need program.

The fight over the certificate-of-need program’s future figures to be the most important health care debate in the legislative session that starts Jan. 14, eclipsing last year’s tussle over whether to expand the state’s Medicaid program.

A group of hospitals and nursing homes have sued DHEC, asking the state Supreme Court to make the state agency reinstate the program. Meanwhile, DHEC’s 2015 budget request makes no mention of the certificate-of-need program. But state Sen. Thomas Alexander, R-Oconee, chairman of the Senate budget subcommittee that oversees DHEC’s budget, said he plans to restore the program’s money in the state budget that starts July 1.

The S.C. Hospital Association says the number of health care providers moving forward without regulatory approval “truly shows that there are people who are trying to take advantage of this confusion in the marketplace,” said Jimmy Walker, a senior vice president.

“You don’t see hospitals listed,” he said. “We’ve had hospitals contact us and say, ‘We are really challenged right now because there is this law that requires people to get a certificate of need, and we’re not able to get one, and we’re worrying about the disruption of some of our patient-care services.’ ”

South Carolina is one of 36 states that has a “certificate of need” law.

That law says hospitals and nursing homes can’t open unless they have a certificate of need from DHEC, the state agency that regulates health care services. It also says hospitals and nursing homes cannot expand their services or buy certain medical equipment without a certificate of need. The goal, supporters says, is to keep health care costs down by preventing the unnecessary duplication of expensive medical services.

South Carolina’s certificate-of-need law is still on the books. But there is no money to enforce the law after Haley vetoed its appropriation and the Republican-controlled House of Representatives sustained her veto.

“It’s no different than saying you have to have a driver’s license to be able to drive, but we’ve shut down the office where you get your licenses,” said Sen. Joel Lourie, D-Richland.

The S.C. Hospital Association says a survey of its members found “more than 45 percent of our hospitals have delayed planned capital projects as a result of the suspension, with potential project costs of about $60 million.” The association adds the quality of care in S.C. hospitals will suffer without a certificate-of-need program.

“We would be concerned that if you didn’t have the certificate-of-need program, you could have a proliferation of hospitals doing certain services, but they don’t really have enough volume to be proficient at and quality outcomes go down,” said Alan Stalvey, as senior vice president of the association.

Not all hospitals agree.

Bruce Holstien president and chief executive of the Spartanburg Regional Healthcare System, said when his company tried to put a cancer center in Gaffney “it took us eight years to get us all through the lawsuits.”

“If the overall goal of the certificate-of-need program is to restrain health care costs or overall per-capita spending on health care, then certificate of need has failed,” Holstien said.

Haley, who is running for re-election this year, has vetoed the certificate-of-need program every year she has been in office. She says the program stifles competition and drives up health care costs.

But critics say Haley got her distaste for the program while working as a $110,000-a-year fundraiser for the charitable foundation of Lexington Medical Center, which fought DHEC’s rejection of its certificate-of-need request for a heart-surgery unit for years. (Lexington Medical, subsequently, got the heart-surgery unit in a trade with Providence Hospitals.)

“Whether it’s Obamacare or (certificate of need), anything that puts politics between the people of our state and their doctors and health care decisions is something the governor will fight to end and that isn’t going to change,” Haley spokesman Doug Mayer said.

A group of 10 hospitals and nursing homes, along with the S.C. Hospital Association and the S.C. Health Care Association, have sued DHEC. They argue a budget veto – in effect for only one year – cannot repeal a state law.

“It would signal a drastic shift of power between the branches of government that is irreconcilable with the idea that power should not be concentrated in the ‘hands of too few,’ ” attorneys for the hospitals wrote in a legal brief filed at the state Supreme Court.

In response, attorneys for DHEC say the hospitals “minimize the role in the legislative process accorded the governor by our Constitution, treating her sustained veto as some sort of aberration.”

“On the contrary, it was the central event,” DHEC attorneys wrote, citing prior Supreme Court rulings saying once a governor’s budget veto is sustained “there is no longer any authority to expend state funds for the purpose stated on the line.”

Conceding the certificate-of-need program “is not a perfect process,” the Hospital Association says it supports Sen. Peeler’s bill – S.568 – to reform it, including requiring the loser of a certificate-of-need appeal to pay the winner’s legal fees.

Peeler said the certificate-of-need program was extreme before Haley’s veto, and it is extreme after the governor’s veto.

“First, it was the North Pole and, after the veto, it is the South Pole,” he said. “We’ll wind up somewhere around the equator, I guess.”

Reach Beam at (803) 386-7038.

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