SCOGA to Hear Hospital “Certificate of Need” Appeal Monday

The Georgia Supreme Court is slated to hear oral arguments on “certificate of need” laws that have long been considered by many to be “anti-competition.”

The case stems from an October 2014 attempt by two OB/GYN doctors, who own an outpatient surgery center in Bartow County, to expand their center. Initially, the doctors wanted to allow other qualified doctors to also operate at the center, but the Georgia Department of Community Health denied the doctor’s “certificate of need” application.

Under Georgia law, state regulators allowed to veto the operations of new hospitals, the expansion of operations, and sometimes even the offering of additional services. The Georgia DCH reports on its website that CON laws are in place “to measure and define need,  to control costs, and to guarantee access to healthcare services.” The process can be costly for the applicant as they try to prove that the region actually “needs” the new or expanded hospital.

After the denial of OB/GYN doctors’ application by the Department of Health, the Goldwater Institute filed a lawsuit. The appearance before the Supreme Court Monday comes on an appeal to a ruling by a trial judge who upheld the certificate of need laws last fall.

The Goldwater Institute issued a press release on Women’s Surgical Center v. Reese on Thursday:

“A Goldwater Institute lawsuit is seeking to end the certificate of need program, so patients can get better, more cost-effective healthcare, and so doctors can stop wasting resources proving a “need” before they can serve the public. 

The Goldwater Institute is bringing this lawsuit under a state constitutional provision that prevents governments from establishing monopolies. More than a dozen other states have similar provisions…

Monday’s oral argument will be an important step toward giving Georgians the lower-cost, high-quality healthcare they need.”

The federal government did away with their CON law in 1986 and 14 states followed suit, but 36 and Washington, D.C. still have the laws in effect.

Supporters of the certificate of need laws argue that competition would allow specialized facilities to go into communities and cherry-pick the most profitable services leaving patients with loopholes in access to comprehensive care. Supporters also claim eliminating certificate of need laws would give “new” hospitals a financial advantage in the market as existing hospitals would continue to treat patients regardless of ability to pay and would bear the burden of indigent patients.

Opponents of certificate of need laws maintain that they kill competition, drive up medical costs, limit access to care, and stifle innovation.

When considering the rural healthcare crisis across Georgia, Optim Medical Center in Tattnall County shines a light on specialized care. The hospital operates as an orthopedic surgery center which helps support the emergency room. On average, the costs are roughly 40% cheaper and the hospital sees just as many ER patients as it does orthopedic surgeries. Orthopedics remain the specialty, however, thanks to a 1999 law permitting only one in “off-site” centers. Regardless, transition to a specialized hospital has provided priceless contributions to the county and it remains one of the county’s largest employers.

There will be a great deal to consider following the oral arguments. Undoubtedbly, the Georgia Supreme Court is faced with deciding what is right and what works.