If anyone is laboring under the delusion that Virginia is a state that favors private-sector competition and innovation, they need look no further than its Certificate of Public Need (CON) law to see how, in the health care field at least, we can stifle entrepreneurial activity just like the blue states.
The experience of Dr. Mark Monteferrante, the head of Progressive Radiology in the Washington region, is instructive. The Institute of Justice, which represented him in a lawsuit to overturn the law, described his dilemma:
In 2003, Dr. Monteferrante and his partners attempted to add a second MRI machine to their busy office. That process took fully five years and cost roughly $175,000 in filing fees, consultant fees and attorney expenses.
Now Progressive Radiology would like to build a top-notch medical facility in Virginia. They are unwilling, however to spend another five years fighting over whether they will be given permission to buy an MRI machine, particularly when there is no way of knowing in advance whether that permission will be granted.
“Virginia has no problem with our clients providing their services. It just minds them working for themselves,” said IJ attorney Darpana Sheth. “When private citizens want to invest in innovative and effective healthcare services, the last thing the government should be doing is stopping them.”
“While 36 states impose CON requirements, Virginia is one of the worst offenders, requiring a certificate of need for things as simple as opening a private MRI clinic,” says IJ Attorney Larry Salzman. “As even the federal government recognizes, laws like these are outdated relics, and it is past time for them to be taken off the books.”
Unfortunately, a federal district judge ruled against Monteferrante and another physician, Mark Maumel, who was trying to introduce a less invasive form of colon-cancer screening, into the state. The state had every legal right, said Judge Claude Hilton, to restrict patient access to care. According to Bart Hinkle’s op-ed on the subject last week in the Times-Dispatch, the two doctors intend to appeal.
The CON law was conceived in the 1970s as a response to rising health care prices in a fee-for-service environment. The logic was that expensive health care technology needed to be rationed — there had to be a finding of a public need — otherwise hospitals and doctors would run patients through the machines as a way to generate more revenue. Competition does not work in the health care sector like it does in other industries, the argument goes.
That may be true in some instances, but sometimes competitors offer superior products and services. There have been decades of experience upon which to compare CON states with non-CON states and see how the pros and cons settle out. Hinkle cites a Federal Trade Commission report that says, “Empirical studies indicate that CON programs generally fail to control costs and can actually lead to price increases.”
Do the people who compile the “Best State for Business” rankings factor CON restrictions into their methodology? When was the last time Virginia lawmakers looked at the issue? Maybe elected officials should spend less time worrying about the anti-competitive aspects of Obamacare, which they can’t control, and more time thinking about CON, which they can.