The fallout of the political fight over the state Certificate of Need program is about to hit the Midlands, as Providence Hospitals has protested that Lexington Medical Center shouldn’t have been allowed to open a second open-heart surgery unit and a third cardiac catheterization unit while the program was in limbo.
Providence has asked the S.C. Department of Health and Environmental Control to consider its objections. Lexington claims it followed all of the rules in place at the time and should be allowed to continue using the expanded facilities. The board scheduled a special conference call on the subject Tuesday.
The certificate of need process is designed to prevent expensive duplications in health care services, which could lead to higher costs for patients.
The issue grew out of Gov. Nikki Haley’s veto in 2013 of funding for DHEC’s certificate of need program. Although some legislators said they sustained Haley’s veto with the intention of DHEC using other funds to cover the program’s costs, DHEC director Catherine Templeton shut down the program.
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Some hospitals put expansions on hold, while others went ahead with projects. Several hospitals also filed a lawsuit, claiming Haley couldn’t veto funding for a specific program that had been established by law. Last month, the S.C. Supreme Court ruled against Haley and Templeton and ordered DHEC to reinstate the certificate of need program.
And in a related case two weeks ago, Administrative Law Court Judge Ralph King Anderson III ordered that Trident Medical Center must shut down a 14-bed rehab unit that it opened at its Charleston facility this year without going through the certificate of need process. Competitor HealthSouth Rehabilitation Hospital had filed the complaint against Trident.
“The director of DHEC may have said that new and expanding health care facilities could move forward without the Certificate of Need process, but her statement did not give the Department the authority to do that which the law did no authorize it to do, and therefore any reliance on that statement was not justified,” Anderson ruled.
Testimony in that case indicated as many as 70 health care facilities had gone ahead with projects that typically would have required certificate of need approval. Lexington Medical Center, for instance, went through the existing permit process for adding an open-heart surgery unit and a cardiac catheterization unit, according to hospital officials.
“Hospitals go by what the regulator tells them,” said Allan Stalvey, executive vice president of the S.C. Hospital Association. “Hospitals were caught in a no-man’s land.”
The rulings by the state Supreme Court and by Anderson could lead to many other challenges between hospitals competing for market share.
“This is only the tip of the iceberg for the issue surrounding suspension of the certificate of need program,” said Lynn Bailey, a Columbia-based health care economist. “There is much more to come.”
Many of the DHEC staff members with experience in the process were laid off last year. DHEC has to replace them while rushing to meet deadlines for responses to new or holdover certificate of need cases. The agency had said it hopes to have a permanent manager and staff for the certificate of need program in place by July 15.
Lexington and Providence have had an on-again, off-again relationship in the battle for heart surgery capacity in the Midlands. When Lexington proposed opening an open-heart surgery unit in 2004, Providence and Palmetto Health fought against it through the certificate of need program.
When DHEC denied Lexington the expansion in 2006, Haley, then a member of the state House of Representatives and an employee of Lexington Medical Center’s foundation, shepherded a bill through the state Legislature that would have allowed open-heart surgery at the hospital. The bill was vetoed by Gov. Mark Sanford, however, and the hospitals continued to fight over the expansion in court.
Providence eventually agreed to drop its challenge if Lexington dropped its objection to Providence’s expansion of its hospital in Northeast Richland. Providence also de-licensed one of its cardiac operating rooms, granting that capacity to Lexington. Providence also got $15 million from Lexington in the deal.
Palmetto Health agreed in April 2010 to drop its protest of Lexington’s certificate of need in a deal that paved the way for an expansion of Palmetto Health Parkridge in Irmo.
Lexington opened its open-heart surgery unit in March 2012, with capacity built in to add a second unit. The hospital expected to perform about 100 open-heart procedures per year, but it has exceeded its expectations by performing nearly 500 in slightly more than two years, hospital officials said Monday.
The DHEC board in recent years typically has declined to rule on requests like the one to be considered Tuesday, which usually means the complaining party takes the argument to administrative law court.