Medical community split over state's certificate of need law

Monday, June 23, 2003

JEFFERSON CITY, Mo. -- The abandonment of a constitutional challenge to the Missouri law requiring state approval for the construction of new hospitals or the purchase of high-end medical equipment leaves opponents of the statute continuing to push for legislative repeal.

At issue is the state's certificate of need law, which was passed in 1979 with the goal of holding down health care costs and improving efficiency in the system by ensuring that the availability of a certain service in a community doesn't exceed demand.

The medical community is divided on the law. Opponents say the free market should determine what services are available. Supporters say the law protects hospitals that provide a range of care from unfair competition by providers who offer only the most profitable services.

Under the law, the Missouri Health Facilities Review Committee must approve requests for new hospitals, nursing homes, assisted-living facilities and purchases of a single piece of equipment costing $1 million or more. The panel may grant the request only if there is a proven need for the facility or equipment.

Argued was unconstitutional

St. Luke's Hospital in Kansas City sued the state last year after the committee rejected a plan to build a new hospital in Lee's Summit.

St. Luke's claimed that not only was the committee's decision in error, the statute was unconstitutional. It argued that the law is too vague because it doesn't define "need" and that it violates the separation of powers doctrine because four sitting state lawmakers serve on the nine-member review committee, which is part of the executive branch Department of Health and Senior Services.

In March, Cole County Special Judge Byron Kinder reversed the committee's decision but upheld the law. Both the hospital and Attorney General Jay Nixon, representing the committee, initially appealed but agreed last week to drop their cases.

Nixon said in a statement that the benefit of reinstating the committee's decision was outweighed by the possibility of the appeals court invalidating the certificate of need law.

Tom Piper, director of the state's certificate of need program, said the committee fields about 70 applications a year, plus another 100 inquires concerning whether certain projects are covered by the law. He said the program is a proven money saver.

"We can show that over the last 10 years over $1 billion has been saved in capital costs," Piper said.

A recent study commissioned by the Big Three automakers showed their costs of providing employee health care were lower in certificate of need states compared to states without such laws, Piper said. Thirty-six states have such a program.

Several bills that sought repeal of all or part of Missouri's law were considered in the legislature this year, but none made it to either the House or Senate floor for debate.

'Unduly regulated'

Jeffrey Bush, president and CEO of Poplar Bluff Medical Partners, testified in favor of one of the bills earlier this year.

Bush said Friday that state regulation hampers consumer choice, which because of consolidation and mergers in the industry is already restricted. Poplar Bluff had three hospitals at one time, he said, but now there is only one.

"It is a segment of commerce that is unduly regulated," Bush said. "What if someone said you could only have one grocery store or one gas station? What would that do to price and quality of service?"

Medical Partners, which formed in 2000 and has 39 member physicians, is in the process of building a medical campus at Poplar Bluff in conjunction with St. Francis Medical Center of Cape Girardeau. The last phase of that project calls for a 50-bed hospital that would require a certificate of need. However, that stage remains several years in the future.

"All we want to do is be allowed to compete and give patients a choice," Bush said.

Bush said there is sufficient local demand for another hospital and said his group will pursue a certificate of need if the law remains in place by the time they are ready to proceed.

The Missouri Hospital Association opposes repeal. Daniel Landon, an association spokesman, said profitable services allow community hospitals to maintain more costly services, such as emergency rooms and providing charitable care. If niche providers can offer only the most lucrative procedures that gives them a competitive advantage, Landon said.

"That takes a revenue stream away from local hospitals, which still have to provide the costly but necessary services," Landon said.

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