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Nancy Smith

Florida Must Keep Its Certificate of Need Program

March 15, 2017 - 6:00am

Certainly in most areas of American society, I stand tall for free-market principles. I always have. But when the conversation turns to eliminating what remains of the Certificate of Need Program (CON), I strongly oppose deregulation.

With deregulation, the potential for an increase in cost and decrease in the quality of health care is overwhelming.

I hope before votes are taken, lawmakers will think carefully about Rob Bradley's Senate Bill 676 and Alex Miller's House Bill 7 to kill the program -- and I mean think beyond the "regulation is bad, free market is good" ideology. Think instead about what effect it will have on patients if total deregulation becomes law.

Shouldn't the patient be every legislator's first concern?

In the first place, nothing in the CON system is broken. As John Couris, CEO of Jupiter Medical Center says, "I'm a free market guy, but in health care, appropriate regulation assures quality. We need the right balance to assure cost and access are right, and we've got that.

"Please tell me what problem exists today," he says. And I couldn't agree with him more.

Show me where in the world the free market in health care works. Go ahead. Show me. There are all kinds of successful health-care systems offering pretty decent care much cheaper than here, and they vary widely. But there are no examples of successful health care based on the principles of the free market for one simple reason: In health care, the free market just doesn't work. And people who say it does are ignoring overwhelming evidence.

What I'm saying is, "health" is not a commodity. No matter how often you hear the term "health-care market," there's no such thing. That's why "free market" doesn't apply. Those who believe that choosing a health-care product or service is no different than buying a car, television, or cell phone might feel differently after, say, contracting the Zika virus. 

Chris Ladd, creator of put it this way in a story in Forbes magazine: "As I lie unconscious under a bus, I am in no position to shop for the best provider of ambulance services at the most reasonable price. All personal volition is lost. Whatever happens next, it will not be a market transaction."

Senate Bill 676 calls for the Agency for Health Care Administration (AHCA) to develop licensure rules for new providers or facilities providing new services, and sets guidelines for the licensure of hospitals and hospice facilities. It's a little more nuanced/balanced than the House bill, but the result is the same -- it would allow hospitals to expand pretty much however they choose.

Under existing law, health care providers must obtain a Certificate of Need prior to constructing new hospitals, nursing homes, hospices or intermediate care facilities in the state, or to convert from one type of health care facility to another.

Bradley says, “By eliminating the state’s restrictive CON process, we’ll increase competition and drive down the cost of health care for Floridians.” Not true. Evidence of the opposite is all over the Internet.

What's well-documented is, the more an institution does something -- an organ transplant, for example -- the better it does at that thing. It becomes expert and the patient wins. Volume really does equal proficiency. 

"Look at our situation," said Couris. "We have a 40 percent to 60 percent occupancy rate at our hospital. Where's the buildup of need for new beds? Access doesn't improve with more competition, it potentially gets worse. And certainly increased competition isn't going to lower cost."

Bruce Rueben, president of the Florida Hospital Association, said this: "If you let someone come in and develop a specialty hospital, then they can take the paying patients out of the hospital and leave those covered by government insurance or none. (Certificate of Need) was designed to make sure that didn’t happen."

In states without a CON process, the situation Reuben describes is a common and major problem.

I realize Republican leadership in both chambers embrace the Bradley and Miller bill. So does free-market-loving Gov. Rick Scott. In his statement of support, the governor said, "This session, I want to fight to make the healthcare system fair for families ..." 

If he gets his way with deregulation, I'm not sure what families he's talking about.

Another thing: As part of the CON process, the public gets to weigh in on whether they want another hospital. Take away the process and you silence the public's voice.

David Ashburn, Greenberg Traurig, P.A. managing shareholder, reminded me the Certificate of Need law was simplified years ago; yet many people wrongly believe every CON applicaton still results in a multi-million-dollar, years-long litigation battle.

Liz Dudek, former, long-time secretary of AHCA now with Greenberg Traurig, agreed. "As a matter of fact, Florida is one of the least regulated states," she said. "You hear a lot of people say, 'You never get an approval if you apply.' I can tell you, yes you absolutely do."

Asked why she favors keeping the Certificate of Need Program as is, Dudek said, "The primary driver behind these decisions has to be the consumer" and the CON Program is the best way to assure quality, she said.

Don't do this, legislators. Think long and hard before you break what isn't broken. 

Reach Nancy Smith at or at 228-282-2423. Twitter: @NancyLBSmith


Great piece but I would have loved to see more facts instead of 'Bradley says, “By eliminating the state’s restrictive CON process, we’ll increase competition and drive down the cost of health care for Floridians.” Not true. Evidence of the opposite is all over the Internet.' There are states that have had CON and removed it which can be cited. Some states like Texas do not have it but are very difficult to open certain new medical facilities like hospices in, so it operates more or less like CON. For hospices, when CON goes away then the national for profits target a high density nursing home to setup operations from and radiate out from there. They stay away from traveling distances to service rural patients, favoring a lower cost care delivery model. This means the non-profits get less of the lower cost patients and run into financial trouble which leaves rural patients without a local hospice option. Quality is still high in both instances but just like merging airlines does not equate in more route options, removing CON does not necessarily equate in more options for patients and caregivers.

CON is important for controlling cost. If you have more MRI machines then more MRIs have to be performed to cover the cost of these machines. If more hearth catheterization labs are built, more heart catheterizations will be performed. When unnecessary, high cost services are over prescribed then this increases the cost of healthcare for everyone. This is actually a large contributor to the current high cost of healthcare in the U.S. Some things are what they call counter intuitive. It would seem that competition should decrease cost but this is not true in all cases. Also, you do not want to have every hospital performing certain highly specialized surgeries (ex. heart and brain) because you cannot concentrate specialists and then give them enough business so that they can develop expertise in doing these procedures. If a surgeon does a certain type of surgery one per year versus fifteen time you start to see the problem. It is one thing to overbuild restaurants and you have a few go out of business. This is a little more risky when you are talking about hospitals. As they go down towards bankruptcy then patient care starts to deteriorate. You could be that last patient before the hospital can no longer keep its doors open because there are just too many beds in the area. We have got to get this idea out of our head that all governmental regulation is bad. We really do need good regulation. It makes us all safer and in certain situations actually holds costs down.

What about the areas of the state that have little or not healthcare? The CON throws these areas under the bus by not allowing or stopping construction of hospitals in these areas. The populated areas of the state always win out in the CON process at the price that rural Fl pays for them to get better access to healthcare while we go lacking.

I think this is a great opportunity for healthcare providers to engage in more innovative methods, for example, telemedicine. Through telemedicine, hospitals can serve rural patients in a more cost effective, timely way. Whether it be through remote consultations, in-home monitoring or even diagnostics, the potential to improve care for these populations is endless.

I bet you do not live in a rural area.

It seems that our Federal Govt is about to transfer all oversight responsibility to the States. If the States deregulate, there will be no oversight. Who is going to write the regulations and enforce them if the CON goes away?

Let's not get standards of healthcare quality and free market confused. A free market society in healthcare can definitely work and has worked. CON process is archaic and riddle with government control to limit true competition which ultimately will drive quality. Removing the CON process is not going to have everyone running out to build new hospitals or buy expensive machines because these things cost money. Furthermore, I have seen patient care benefit from competition in other states. For example, cancer treatment has seen it's share of competition from for-profit systems which has pushed the envelope in developing innovative and comprehensive ways of treating cancer and providing patient satisfaction second to none. This spirit of innovation has pushed other competitors to strive to compete and the patients benefit from a full choice of top quality providers in the for-profit, non-for-profit and government facilities. Patients now, more than ever, are purchasers of empowered, high quality, efficient and cost effective medicine. What we need is not a CON!!! We need for CMS to continue to drive innovation and quality through their Medicare and Medicaid programs which provides the oversight for quality, innovation and cost control and ultimately better reimbursement. Hence, the guy under the bus, unconscious, does not have to make a choice because the policy and quality requirements are in place for all Trauma/Emergency facilities to adhere.

I agree with you in that competition is healthy and can help drive innovation in business. However, I don't think that it is competition we are lacking in the Florida healthcare industry. Hospitals compete here everyday, and that is a good thing. I think one thing you do not touch on is the fact that competition in healthcare is not like other industries. For example, if you bring more pizza shops into a market, sure - prices will go down. But if you let more health providers into a market without any oversight or planning to determine the need for more services, costs will likely rise. This is because larger health systems would likely move in and absorb local and regional hospitals and because of the number of lives they cover, they are then able to negotiate higher rates with the insurance companies. We know that the insurance companies are not going to absorb those higher costs so instead, they are passed down to the consumer through more expensive premiums. Is this really what the legislators want? Increased costs for the consumer?

Totally agree with you!

Free market principles, one example in healthcare is LASIK. Cost continue to fall due to competition and quality remains high. Performance standards ok, restriction of service availability for consumers to choose not good or needed. If the rescue ambulance service does not provide adequate performance they will not survive.

If CON goes away, Nancy is correct in that the volume of procedures would be spread out across providers even thinner. So not only are providers becoming less proficient at something, but they are also putting a further strain on their already stretched resources like nurses and physicians. I cannot believe that this equals higher quality.

Comments are now closed.

nancy smith

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