Contesting the CON con

Dr. Mark Monteferrante

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 “As even the federal government recognizes, laws like these are outdated relics, and it is past time for them to be taken off the books.”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.

– JAB

22 Responses to Contesting the CON con

  1. You are correct. WHERE are the Republicans on this? Where is McDonnell and Cantor and Allen on this?

    If McDonnell can require women to pay for an ultra-sound they don’t want nor need why can’t he do away with CON?

    The right is always talking about their health care “ideas” but that’s about as far as it goes.

  2. Once again, the Imperial Clown Show in Richmond has left Virginia as an outlier among states ….

    “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.

    The only real question is how the corrupt General Assembly manages to line its own pockets with this process.

    Virginia should change its state motto to be “Virginia: Always one of the worst offenders”.

  3. I regard myself as “pro-choice” on abortion. However, the Democrats’ argument they oppose interference between a woman and doctor on the issue of an ultra-sound pre-abortion is BS. An ultra-sound is required by Planned Parenthood (a non-physician) before an abortion will be performed. So the Ds aren’t really against any interference between a woman and her doctor.

  4. and a doctor might well require it as medical but what business is it of the state especially when we keep hearing that we need small, less obtrusive govt. That’s not BS, that’s hypocrisy.

    re: CON

    The GOP spend all of it’s time yammering about the govt doing health care ( but not for abortions) … and how that is wrong and that we should encourage the free market and yet with CON.. what has the GOP done to do away with regulation and actually implement things that would encourage a free market?

    I say the GOP is full of BS and Hypocrisy on a number of issues along these lines.

    If they really did believe in smaller and less intrusive govt and a free market – they’d get out of health care on a number of issues.

  5. Larry, BS. The argument from the Democrats is that there should be no interference between a woman and her patient on the abortion issue. If a doctor orders an ultra-sound, and the woman accepts – fine. However, if it’s wrong for a third-party to interject, it’s wrong for a third-party to interject. Period. The argument’s logic fails. Period.

  6. TMT, the Dem argument is that it’s between the patient and the doctor and not the state.

    and yes.. if the dr recommends an ultra-sound and the woman agrees it is fine and if she doe not she can go to another doctor.

    It’s WRONG for the 3rd party if the 3rd party is the Govt – and it’s the same Govt that is supposed to be small and not intrusive.

    the “logic” is that the issue is between consenting parties – not the govt.

    those who want the govt involved and are arguing “logic’ at the same time … fail… IMHO and you end up with idiots like Akins.

    That’s what the GOP has become. They say one thing but the reality is they will accept the most odious philosophies just to maintain their political position. If that’s not a “fail”, what is?

  7. Can’t have free market. Can’t have socialized. We are forced to keep the corporate oligarchy.

  8. California’s legislature, no parent can send her/his child to a psychiatrist/counselor to “change their sexual orientation from gay to straight.” Is that government interference with a doctor-patient relationship? With the decision of a parent to obtain medical treatment for a child? Which is the third party that’s interfering? The state? The parent? I’m not advocating one way or the other on this issue, just trying to figure out what the Democrats are advocating.

  9. The State intervenes in child issues all the time. The horrible truth is that some people should have never have become parents and they abuse their kids and their only protector is the govt.

    I’m not a big supporter of abortion. I think it is a terrible choice but sometimes the best option. I understand the opponents position and I’m fine with laws that are supported by the majority of people – I support the governance that our country was founded on.

    but we’re off on a tangent here.. when the subject is the CON and things like it and how we could have and could have had a more free market health care system – on that perhaps would have preempted ObamaCare if those free market things were actually done – and actually worked – though I am a skeptic that the free market will ever offer insurance to pre-existing conditions much less at the same price charged others but the more free market we can have, the less govt we would need and my view is that we’ve had a hell of a lot rhetoric – from 1993 on – and not a whole heck of a lot of “DO” except of course for Romney who took a State approach and devised a solution that made them mostly immune from ObamaCare.

    Virginia could have done that – but they did not. Heck, they cannot even deal with the CON… and one of the reasons why is good old rent-seekers – the GOP’s own constituency.

  10. Politically, the problem with health care reform is that, for many people, there aren’t a lot of problems with their health care insurance. For other people, there are problems, including those who do not have coverage. But to give coverage to those who don’t have it, it’s not just a matter of creating insurance pools or exchanges. If it were, there would be no opposition to health care reform. Everyone could have access to pooled insurance rates. Everyone would pay a rate that is lower than they could purchase in the free market.

    However, in order to get coverage for those who don’t have it, the government needs to take things away from others. Higher taxes; lower health care savings accounts; mandatory insurance; etc. It’s not a case of taking things away from the Koch Brothers or Warren Buffett. It’s taking things away from a large number of people who will not see any benefits – any improvement in what they receive from their health care plan.

    Rent seekers. Both Parties cater to rent seekers. Some the same; some different.

  11. re: ” However, in order to get coverage for those who don’t have it, the government needs to take things away from others.”

    we’ve been over this before.

    Who do you think it’s being taken away from right now when people use the ERs and the unpaid bill is cross-shifted to those who have insurance?

    How about MedicAid? Who do you think money is being taken away from right now to pay for MedicAid?

    How can other countries cover everyone for 1/2 what we do and not take anything away from anyone but instead everyone has to pay for insurance just like they have to pay for social security?

    The arguments you give TMT do not acknowledge the current realities where people get healthcare and you pay for it right now.

    If we were TRULY serious about not taking money away from people to pay for health care for others – we’d repeal EMTALA and MedicAid and refuse medical care to those who did not have insurance.

    this is more hypocrisy. We say one thing but we refuse to admit the actual truth – and the truth is we already pay and we pay MORE than we should because people who go to ERs and get MedicAid do not get routine care and they wait until their problem gets big and expensive before they seek help.

    I can understand why folks would be opposed to having to pay for others if they were not already paying but what do you say when people are already paying and refuse to agree to a system where if it would work like every other UHC system in the world – costs would be CUT in half?

    where is the logic in the current opposition?

  12. In Virginia – if you want to drive on the roads, you have to demonstrate financial responsibility by having some level of insurance.

    In turn, the State requires Insurance companies who want to do business in the state – to participate in helping to insure those who they normally otherwise would choose not to.

    In addition to that, the insurance companies charge us all a “tax” for uninsured motorists.

    Now – what if Virginia got out of the car insurance business all together? What would happen if it was returned to a true free market condition?

    Be honest. What would happen?

    You would be free, of course, in a true free market, to sue the pants off of someone who injured or killed you or destroyed your property. That’s how the free market is supposed to work.

    Now, what if Va took a similar approach to health care instead of having EMTALA and MedicAid?

    Why would that be any different than how it deals with Auto Insurance?

  13. Larry, I believe a state could have lawful authority to make residents purchase health care insurance just as it does for auto insurance. The federal government does not.

    I would support a phased repeal of EMTALA, such that, over time, people had to pay more of their emergency room costs and, ultimately, all of the costs. Allowing nonprofit insurance pools to be formed and permitting people to buy insurance across state lines makes sense to me.

    You are correct in that there is a cost to the non-compensated use of emergency rooms by the uninsured and those costs are paid by society. Universal coverage would reduce those costs, but it would also increase costs overall as uninsured/under-insured people would use more medical services. Why did most of the big biz-med companies agree to support AHCA? Because they saw more sales. The cost of universal coverage will greatly out-distance what we are paying today as a society. Obama’s plan requires massive transfers of wealth from those with insurance to those without.

  14. @TMT –

    have you seen this:

    http://en.wikipedia.org/wiki/An_Act_for_the_relief_of_sick_and_disabled_seamen

    do you think the forefathers violated their own Constitution?

    What Universal Coverage will do – is require more people to pay for it that can afford it rather than not – much like the way that auto insurance and social security work.

    Yes.. the insurance companies support AHCA and apparently including the parts that ban denial of coverage and differential rates instead of community rates.

    You worked for the Feds, right?

    When you look at the specific parts of the AHCA does it strike you that the Exchanges have similarities to the FEHB?

  15. Larry, there is big difference between a law that applied to sailors and owners of ships in interstate and international commerce and a general law that attempted to require every American citizen and lawful resident to purchase health insurance.

    I did work for the U.S. Department of the Treasury (Customs Bureau) wrapping packages the summer I turned 16. That’s it for federal government service. My wife has, however, worked for the feds for most of her career.

    With all due respect, I don’t think you get the political issue. With Social Security and Medicare, there was a brand new social contract, most people pay a new tax for their working careers and, in exchange, receive specified benefits on retirement and specified coverage of certain medical expenses beginning at age 65. Everyone pays and everyone gets something that did not exist before. The “what’s in it for me” question is answered.

    With AHCA, some people get something they did not have before, and everyone pays something more. There’s no answer to “what’s in it for me” for many, many people. I’m going to be paying more and am not going to see any significant benefits or improvement the the same. It’s one more Obama “steal from some and give to others who will hopefully vote to reelect Obama.”

  16. Okay – for me:

    1. – people who can afford it – should be pre-paying for their eventual health care like we do for Social Security.

    Until we have a viable answer for what we do with people who do not save – we need to have compulsory saving for pension and healthcare.

    2. – if we ARE going to pay for people who cannot afford their health care – we ought to be doing it in the most cost-effective way possible not the worst way possible as we do now.

    HOW we accomplish the two things above can be done a number of different ways – but to NOT do them – will not fix our health care problems.

    No amount of free-market principles will remove the transferred costs to society caused by people not preparing financially for their future needs – and people who did plan but simply cannot afford care.

    When I see the two things above addressed in “free market” proposals then I’ll take them more seriously.

    re: the States can do it

    @TMT – how would you handle job mobility? how would someone that changes jobs and moves to a new state be handled?

  17. Submitted by Richard:

    1. Certificate of Need was in part a response to concern that doctors owning expensive equipment will find a way to pay for it by providing excess services under a fee-for-service model. A particular concern was MRIs and xray equipment. Anecdotally, radiologists are some of the highest paid physicians in part because they are paid by the picture. If you get away from a fee-for-service model, you wouldn’t have these issues. We need to get a system that rewards doctors by outcome and not by the fees they generate.

    2. Anecdotally again, I was talking to a health insurance consultant who was excited about an accountable care organization (ACO) that has been set up in Chapel Hill, NC under the Affordable Care Act. The ACO is a joint venture between doctors (generalists) and a local hospital, who are totally responsible for the health care and costs of the individuals who are enrolled. Instead of an insurance company or a company being responsible for the costs of care, it’s the doctors, who are also in charge of the actual care. The consultant told me that the doctors like it. They have an incentive to keep costs down and also keep patients healthy, so they emphasize preventive care. He was told by an internist of a situation where an older patient fell on the weekend and broke her arm. She had it x-rayed at their clinic. The x-ray was sent to his Ipad. He determined that it wasn’t appropriate to do surgery on the arm, told her to put it in a sling, take some aspirin, and he would see her during the week. This saved an emergency room visit and a specialist. Also, anecdotally, this ACO doesn’t send its xrays or MRIs to the hospital radiologists – they’re too expensive. They send them to an outside shop because it’s cheaper.

    3. In the past new medical technology has made things more expensive. It should make it cheaper because technology helps coordinate providers, prevents duplication (multiple xrays being a prime example), and because computers and other sophisticated equipment should gets better and cheaper. Some of this hasn’t happened though because the free market has been abused by things like certificate of need programs, defensive care (often unnecessary) that enriches doctors (and the malpractice system that doctors use to justify defensive care), the fee-for-service/insurance system that sends oceans of money to healthcare (making our system the most expensive in the world), and the disconnect between cost and the consumer, and cost and outcomes.

    • I agree, the fee-for-service reimbursement system is at the root of many of health care’s problems. ACOs may be a solution, though they have yet to prove themselves. The academic literature describes a number of other possible payment structures. We need to experiment and see what works, and under what circumstances. This is fundamental, whether we have Obamacare or we repeal it.

  18. re: ” If you get away from a fee-for-service model, you wouldn’t have these issues. We need to get a system that rewards doctors by outcome and not by the fees they generate.”

    what is the incentive/motivation for the free market to do this?

    Given what the free market has accomplished so far – not only in this country but in every other country that does not have UHC – what hasn’t the ACO model succeeded?

    The ACO model, for instance, could have been the 1993 alternative to HillaryCare but what happened?

    It could be the REPLACE part of the REPEAL Obamacare but it does not seem to be so.

    The people who are opposed to ObamaCare have never produced anything beyond “ideas” from individuals – no real alternative – such as ACO – in part – because the people who oppose ObamaCare – oppose Govt being involved in healthcare to start with.

    they have no real alternatives – they just oppose and gridlock.

  19. “because the people who oppose ObamaCare – oppose Govt being involved in healthcare to start with.”.

    Well, let’s see …

    1. Medicare is broke.
    2. Social Security is somewhere between fradulent and broke.
    3. The US is somewhere between another financial downgrade and Boomergeddon.
    4. Obama’s favorable percentage is 47% and Congress’ is much lower.

    Gee, I wonder why some people don’t want government involved in yet another massive wealth transfer scheme?

  20. Govt ALREADY is involved in health care. Have you heard of MedicAid, EMTALA, Medicare, the VA, TRICARE, SCHIPS, etc?

    Medicare is no more “broke” than DOD is if you think about it.

    Both are spending more than we are taking in – in revenues.

    but then we’re taking in less than we did 60 years ago.

    Social Security will never be broke as long as we continue to collect FICA taxes – it will pay out less than it originally intended but if you think about it – FICA and SS do what Medicare and DOD do not do – which is not pay out more than it takes in.

    I would ask again – name a country where the govt is not involved in health care – that you would cite as a model for other countries like the US to follow.

    We have what boils down to – an idiotic mindset with regard to healthcare and the govt.

    Every single industrialized country in the world – that would be the ones that are the best in the world at life expectancy and low infant deaths – have the govt involved in health care – INCLUDING such economic leaders as Singapore and Hong Kong.

    If you don’t want govt involved in health care – then propose something real that actually has substance instead of just “anti” govt.

    The GOP had a chance to do this since 1993. Virginia has had the opportunity to do something in that same timeframe also.

    And all we have gotten from those who are opposed to the current path – is opposition and gridlock – not solutions.

    I say we run the “anti” people out of town on a rail. They have no solutions other than political and economic vandalism.

    • “Medicare is no more “broke” than DOD is if you think about it.”.

      Hmmm ….

      Your logic of argument is sometimes hard to fathom.

      I will add the bankrupt DoD to my list of reasons why we don’t need yet another massive entitlement program run by the government.

      Thank you for the additional example for my argument.

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