Certificates of need hinder competition

Missouri lawmakers decided in the late 1980s that consumers of health-care services needed protection from a glut of hospitals, nursing homes and surgery centers. This was at a time when several trends were converging, including an aging population, managed health care and new high-tech medical equipment with multimillion-dollar price tags.

So the legislature in Jefferson City, like many other states, adopted a program called certificate of need. New facilities or equipment costing more than $1 million dollars would have to be reviewed and approved by a state panel.

In theory, limiting the number of medical facilities -- to areas where demand would clearly support new construction or new equipment and where existing hospitals or nursing homes couldn't handle local needs -- would ensure profitable operations and, it was thought, hold down health-care costs.

But, in reality, health-care costs have gone up while health-care providers have frequently been denied approval to offer new or improved services. In addition, certificates of need became a serious point of contention as health-delivery competition escalated.

Moreover, there were plenty of loopholes to get around the certificate process and delays. For example, large projects could be split up into several smaller projects that all fell under cost limits. For the most part, certificates of need became political, acerbated competition and created delays in needed new facilities.

At the end of last year, the certificate requirements for hospital expansion and for construction or expansion of outpatient surgery centers expired. As a result, state officials say, there has been a jump in such projects. At the end of this year, another section of the certificate law is due to expire. This would eliminate a statewide cap on the number of licensed nursing and residential-care beds.

Efforts are afoot in the legislature to extend the cap on nursing homes. And there is some talk about putting the certificate requirements back on hospitals and surgical centers. Both of these efforts, of course, ignore the reality of competition, which has the effect of leveling out access to health care.

Certificates of need, for example, did not stop the closing of many hospitals in small towns across Missouri. Cost factors that could not be offset by paying patients were the cause, aided and abetted by Medicare reimbursement programs and managed-care directives.

Most nursing homes currently have waiting lists. Surely having more beds available can't be seen as anything but good news for elderly Missourians in need of such care. And if more than enough facilities are constructed, competition will see to it that those providing the best services will succeed both financially and in bolstering consumer confidence that loved ones are receiving the very best care.

Let the certificate-of-need requirements disappear. The marketplace will provide us with the best in health care.