Blame COPN for Looming Bed Shortages

by James Sherlock

The hospital bed shortages cited by Jim Bacon in his post, “Not Nearly Enough Hospital Beds, is a direct outcome of how the Virginia Department of Health (VDH) has administered Virginia’s Certificate of Public Need law. Virginia’s scarcity of physicians and nurses also can be traceable in part to COPN’s denial of opportunities to doctors, as I have written previously, but this column will address the impact of the legislation on beds and facilities.

Virginia’s Health Commissioner has sole responsibility under the COPN law for determining how many beds are “needed.” Commissioners since 1973 have taken no discernible action to make sure there are enough beds, only that there are not too many, whatever that means on a given day.

The COPN Process. The VDH COPN Division makes recommendations on each application, and the Commissioner makes the decision. There used to be five regional review authorities that made recommendations before applications reached headquarters, but four of them died out and only the Northern Virginia regional authority survives. The judgments of approval or disapproval are entirely subjective.

Often the COPN Division has made a different recommendation than the regional review authority, or the Commissioner has made a different decision than recommended by the COPN Division.

There were 1228 applications for a certificate of need between the beginning of the year 2000 and the October 2019 COPN Monthly Report that I used as a source here.  Of those applications:

  • 646 were approved at all three levels and 84 through two levels more recently required for approval. Thus 61% received “clean” approvals.
  • Twenty seven applications were recommended for denial at both regional and staff levels and yet approved by the Commissioner;
  • Twelve were recommended for approval by the COPN Division and denied by the Commissioner;
  • One hundred ninety five applications did not survive the process: 142 were denied, 42 withdrawn pending denial and eleven were delayed indefinitely.

I could cite more data but you get the idea.  Remember every one of the applicants spent a lot of time and money on the planning and application process and expected approval. Hundreds more projects — mainly surgical centers and diagnostic imagery centers — were never initiated because physicians knew the score and did not bother to apply.  The unwritten rule has always been that while hospitals and health systems may be denied a few applications, especially when they butt heads with one another, seldom will the state allow competition to threaten their core interests. The amount of money at stake has been and remains breathtaking.

The Effects on COVID-19 Capacity. Since the year 2000, VDH has denied dozens of applications and dozens more were withdrawn that would have expanded significantly the number of beds available for this emergency. Since the applications came from successful corporations with business plans supporting the projects, it fell to VDH to deny that business case based on its own vague concepts of need.

The certificate denials or withdrawals in the past 20 years that reduced pandemic capacity include:

  • New Acute Care Hospitals. Nine applications, three from Bon Secours in south Hampton Roads, two from Doctors’ (Riverside) Hospital in Williamsburg (second one revised, re-submitted 18 months later and again denied), one from Sentara to be built in Northern Virginia, one from Inova in an unspecified Northern Virginia location, a second different one from Inova Loudoun Hospital Center, and one from HCA, also to be located in Northern Virginia, were denied
  • Additional hospital beds: The state denied six applications: three from  Inova, two Sentara, and one Carilion.
  • Acute care infant bassinets: two from HCA Lewis-Gale Medical Center were denied.
  • Inpatient Long-Term Care or Rehabilitation Hospitals: 11 applications, nine for new facilities and two for additional beds were denied.
  • Outpatient surgical facilities. Thirty applications for outpatient surgery centers, which would serve to relieve pressure on hospitals during the crisis, were denied. Hundreds more applications were never submitted.
  • Nursing homes. Ten applications for nursing homes, one for a 180-bed facility and nine for additional beds, were denied. Those would have provided space for COVID-19 isolation wards for the elderly in a nursing home setting.

What to do?

 This terrible law, so badly administered for almost 50 years, must be repealed. Tens of billions of dollars worth of decisions were made without the consistent applications of objective principles. The data since 2000 alone show that both the COPN process itself and the wealthy regional monopolies it created are ripe for an investigation by the Virginia Attorney General and/or the Justice Department.

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5 responses to “Blame COPN for Looming Bed Shortages”

  1. djrippert Avatar

    “The data since 2000 alone show that both the COPN process itself and the wealthy regional monopolies it created are ripe for an investigation by the Virginia Attorney General and/or the Justice Department.”

    It will have to be the Justice Department. Virginia’s Attorney General is a highly politicized position regardless of which party is in power. As a stepping stone to governor, Virginia’s AG won’t ever upset the apple cart of business as usual in Va ….

    1. Special interests pour money into the pockets of Va politicians

    2. The money is laundered and bundled by those politicians rendering operations like VPAP all but useless

    3. Legislators vote in favor of the special interests

    4. Virginians suffer

    I had some hope the new Democratic majority might address this endless corruption until I heard Eileen Filler-Corn spiked the proposed legislation to ban political contributions from companies regulated by the General Assembly.

    Some Virginians who might have lived may well die based on the corruption of our General Assembly.

  2. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Jim Sherlock is right. His is a big story.

    But Jim’s story is only the tip of an iceberg. And now, as I suggested some three weeks ago (hard to keep up), we are in for a vast sea of changes across our country (and indeed the world) by reason of this pandemic.


    This corona-virus given its highly contagious nature that requires shutting down our national profit centers for substantial periods of time, now not fully known, is now quickly morphing from a huge medical challenge alone into huge economic challenge nationally and worldwide that is wrapped around and driven by, the medical challenge. The gist of this latter problem is that many of our advanced analytics and corrupted regulatory schemes in industries like health care, education, and entitlements have been set up for political ends, or ill defined maximum efficiency ends that serve only special interests, not broad public interests.

    What is wrong with that?

    The great problem is that “maximum efficiency” has been far too often defined as designing systems that maximize profits, power, and control for a few. And they work only in the “best of times.” This twists and distorts and makes fragile the systems in the worse of times, so these systems fail to, and lack the capacity to, serve their central mission, which is to serve the many, at the lowest reasonable cost, in good times, middling times, or bad times.

    Thus, even in good times, we are ill equipped to handle many everyday needs of the public like preventative medicine, and general practice medicine. And, at the same time, we are grossly ill equipped to deal with old fashioned black swan event like this current virus. So this medical event now threatens our economic health and our economic future in the most fundamental way.

    Be calm. We will deal with this. We will succeed in dealing with this. But in order to succeed, we have no choice but to vastly reform many of our ill equipped systems in institution after institution in America – first with health care and our obscenely wasteful higher education then with K-12 schools, followed by many other institutions in America, including not only our politics but also our culture.

    This cleansing is long overdue. Now we have no choice. And our solutions, if rightly arrived at, will quite literally save our future, and that of our children, and our children’s children.

  3. LarrytheG Avatar

    Just FYI – , in 2005-2006, Virginia did approve a new hospital in Fredericksburg that was fiercely opposed by the existing hospital MWC Corp. The new hospital was a for-profit – HCA and it subsequently got built and has established itself. It’s a full-range hospital complete with an ER. It has 133 beds.

    So .. it does happen… here’s the 2005 news article on the planning:

  4. The Fredericksburg situation is the exception that proves the rule. No question, COPN rules are a huge dead weight on the competitive market.

    The question for health care reform, however, has to be framed in terms of the absence of transparency and competition and consumer skin-in-the-game to keep down health care costs. If the marketplace doesn’t contain costs, then, regulators have to do it. That stinks, but it’s better than nothing. That’s what we do with utilities granted state-defined retail monopolies.

    The specific question for COPN-haters is, is COPN an effective regulatory tool at all, or does it simply make hospital and health care price manipulation that much easier? I think it is a deeply flawed concept and as Jim has pointed out here many times, it insulates the status quo from change and lends itself to abuse by petty and sometimes corrupt bureaucrats.

    Nonetheless, there’s something to be said for limiting the ability of a hospital to overbuild deliberately, sucking up all the competition and putting the little clinics out of business, until it’s the only game in town and can raise prices as much as desired. This too is part of our commercial market heritage.

    Building excess beds that will not get used anytime soon except in something like a pandemic is suspicious behavior for a regulated entity. The best course is somewhere between the extremes here of too much COPN-style restriction, which we clearly have now, and none at all.

  5. LarrytheG Avatar

    It’s kind of a convoluted issue in a way.

    Most health care services is paid for by insurance and they negotiate the reimbursement and form networks where they target their business.

    A few years back in Fredericksburg – there was a huge dustup between Anthem and the hospital and local providers when it refused to reimburse at the numbers the hospital and providers wanted and there was a standoff of weeks/months where people with Anthem were not “covered” at the providers who did not agree with Anthem.

    People would have to pay out of pocket and while some could afford some tests and imaging , the big bills most could not and so they had to go outside the city to where Anthem had contracts.

    So, the point here is that most folks with insurance won’t gain anything by negotiating unless they have a substantial co-pay and even then it won’t do any good to go to a provider not in your insurance plan.

    So I remain skeptical about the “free market”, supply-demand idea.

    Now for the things that insurance won’t cover – or for folks who don’t have insurance, then having competitive providers would be good but even then there are issues with quality. Cheap Xrays and MRIs might come from cheap equipment or lower paid imaging analysts and if you got a lump – or whatever – dollars to donuts the hospital is going to provide the gold standard.

    I do not dispute anything that Jim is saying about the power of the Health Care associations and their ability to influence COPN but their point of view is fairly simple – they must take everyone including those that don’t pay and a lot of their services are capped by what the insurance companies will reimburse for – so they want some profitable services from which to cover their uncompensated charity care.

    No one is offering to compensate the hospitals for those losses much less those that want to take away the profitable services.

    If we had a solution – a way to compensate the hospitals for their charity care – then I’d be totally on board with getting rid of COPN.

    And as I pointed out – the State actually allowed a new hospital to locate in an existing hospitals service area – 133 more beds so it’s not like there is none at all – allowed.

    As far as I can tell, no one is saying in the Fredericksburg Area that one should go to Hospital X because it offers lower rates… it’s not on the radar at all. I’ve received services from both hospitals and the insurance pays the same reimbursement.

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