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Does SC health care need Certificate of Need?

After months of limbo during court challenges, the now-revived Certificate of Need system for health care entities in South Carolina is ripe for change or abolishment by the Legislature.

Based on comments during a Tuesday meeting of a House Certificate of Need Ad-Hoc Committee, opinions are all over the board on the program designed to prevent over-saturation of health care capacity and dilution of quality.

The S.C. Hospital Association and the S.C. Health Care Association think the answer is to streamline the process so expansion projects don’t get put on extensive hold. Some physician groups and ambulatory surgery centers would like to see the program ended, or at least its scope tremendously reduced. One physician argued that the program needs to be strengthened to ensure high quality facilities survive.

The committee, chaired by Rep. Murrell Smith, R-Sumter, is expected to recommend legislative changes to the process.

Gov. Nikki Haley’s attempt to kill CON through a budget veto was overruled in the summer by the S.C. Supreme Court. The S.C. Department of Health and Environmental Control shut down the process after Haley’s veto. Before the court ruled that move was illegal, some entities began projects that had been on hold awaiting CON approval. The resulting mess set the stage for another attempt to overhaul the program.

“This is the third study committee in excess of 10 years, and we’ve only nibbled at the edge of reform,” Smith said.

Some would be happy with only a few more nibbles.

Without the “bridle” of the program, new nursing homes would be built in urban markets but never in rural areas, said Randy Lee, president of the S.C. Health Care Association. But Lee’s organization would like to see the review process for nursing home expansions by DHEC and the appeals process through the Administrative Law Courts shortened. Now, it can take two years to get an appealed case through the system.

Thornton Kirby, CEO of the S.C. Hospital Association, suggested hospitals should be allowed to add new beds at their existing sites without going through the CON process. His group also would like to see hospitals be allowed to expand any service for which they already have approval. That would cover the Lexington Medical Center’s second open heart surgery unit and third catheterization units, both opened while the CON program was in limbo and since ordered to close until they get a CON.

The hospital association also recommends raising the threshold for new equipment purchases or major capital expenditures. Now, equipment purchases of more than $600,000 and capital expenditures of more than $2 million require a new CON.

Dr. David Vroman, an ophthalmologist in Charleston, has run into CON roadblocks in trying to build a new surgical center for a five-physician practice. He estimated the cost of hiring lawyers and consultants to get through the process will be more than $200,000. His effort is being challenged by a large company that offers similar services in the Lowcountry.

“Capitalism I thought was a kind of important process in this country,” Vroman said. “The Certificate of Need process is limiting quality of care by stifling us.”

Dr. Albert Borelli, a radiologist in Bluffton, countered that without regulations there would be many magnetic resonance imaging facilities with low-quality equipment providing inadequate services. “Health care is not a free market,” he said.

Ann Margaret McCraw, CEO of Midlands Orthopaedics, said the process forces higher health care costs by encouraging the status quo. For instance, new ambulatory surgery centers that are more cost-efficient than hospitals often struggle to get the required CON to compete with those hospitals for patients.

“When we just dig our heels in to preserve a regulatory program that’s not keeping pace with medical advances,” McCraw said, “then we’re not focusing that energy on leveraging the advances.”

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