NC hospital frustrated by rival’s CON game

North Carolina’s hospitals vigorously defend state certificate-of-need restrictions. Their vocal opposition has helped thwart recurring legislative efforts to blunt or eliminate the CON regime.

That’s why it’s interesting to read a court filing from a major hospital that offers a compelling case against CON. While focusing on an isolated dispute over one piece of medical equipment, the hospital helps make the case for gutting CON restrictions.

The certificate of need is a government permission slip. Health care providers in North Carolina cannot build a hospital, add new hospital beds, open other medical facilities, or even purchase high-dollar equipment without a CON.

Fifteen states have scrapped their CON laws. North Carolina maintains one of the strictest measures.

Hospitals defend the system, though they often wage legal battles over access to a particular CON.

One such dispute pits WakeMed against rival Duke University Health over a linear accelerator or LINAC. A hospital needs a LINAC to provide radiation treatment for cancer patients.

WakeMed offered its legal arguments on Aug. 13 to the North Carolina Court of Appeals.

“WakeMed has built a thriving cancer center with medical and surgical oncology services but cannot offer the full range of cancer treatment without a linear accelerator (LINAC) to provide radiation oncology,” WakeMed’s lawyers wrote. “Duke already has four LINACs and approval for a fifth that should already have been in operation, but for repeated delays by Duke.”

“Duke also directly benefits from WakeMed’s inability to offer radiation oncology in the form of a steady stream of WakeMed patient referrals and tens of millions in revenue annually,” the brief continued. “Accordingly, Duke has repeatedly moved to block WakeMed from obtaining its own LINAC, first by opposing the opportunity for any provider to apply for a LINAC, then by reversing course and applying for the only available CON to acquire a sixth LINAC that it does not need, and again by appealing the Agency’s decision to approve WakeMed to obtain a LINAC.”

The North Carolina Department of Health and Human Services chose WakeMed over Duke and UNC/Rex in September 2023 to add a new linear accelerator in Wake County. The decision essentially blocked Duke and UNC/Rex from buying another LINAC. Both losing hospitals initially challenged the decision, though UNC/Rex later dropped its case.

An administrative law judge threw out state regulators’ ruling in February. His final decision rejected a new CON for WakeMed but stopped short of awarding one to Duke.

“The Final Decision in this case plays into Duke’s consistent efforts to block competition and prevent WakeMed from developing the full range of cancer care by making multiple errors of law to reverse the Agency’s decision,” WakeMed’s lawyers argued to the Appeals Court.

The LINAC dispute hurts health care consumers, WakeMed argued.

“Patients’ difficulty accessing cancer care is what led WakeMed to develop its own cancer program,” hospital lawyers wrote. “Without a LINAC, WakeMed must refer (send) its patients to either Duke or UNC/Rex for radiation therapy.”

“However, referring radiation therapy patients to other providers is inadequate — dividing cancer care between multiple health systems (called fragmentation of care) hinders communication and leads to delays in care, higher cost, poor outcomes and poor patient and family experience, as WakeMed has encountered,” the court filing argued. “WakeMed’s patients wait more than three times longer than the average patient in the service area to begin radiation therapy. Also, WakeMed cancer patients who need radiation could avoid significant barriers posed by having to travel to another system for treatment if WakeMed had a LINAC.”

In 2023, when the legal battle started, Duke and UNC/Rex operated nine LINACs in the service area, according to WakeMed’s brief. Duke won state approval in 2021 to add another machine but does not expect it to use it until 2029. Meanwhile, UNC/Rex has yet to operate a LINAC permitted by a CON awarded in 2016.

Yet neither rival wants WakeMed to secure its first LINAC.

WakeMed seeks to restore government regulators’ initial CON decision. The hospital does not ask courts to end CON restrictions.

Yet descriptions of “fragmentation of care,” “delays,” “higher cost, poor outcomes, and poor patient and family experience” support those who believe CON does more harm than good.

There’s no compelling reason to block WakeMed, Duke, UNC/Rex, or any other provider from adding a new LINAC. Nor is there a strong case for government to use the CON process to limit other major medical equipment, hospital beds, or health care facilities.

Reformers can thank WakeMed for boosting the case against North Carolina’s ongoing CON game.

Mitch Kokai is senior political analyst for the John Locke Foundation.