Virginia battle over Certificate of Need laws mirrors N.C.'s

Published February 17, 2016

by Katherine Restrepo and Kari Davis, Carolina Journal, February 16, 2016.

Virginia may advance reforms in its Certificate of Public Need licensing laws for medical services as early as this week, if a bill removing anti-competition rules for hospitals passes the state’s House, making it eligible for consideration by the Senate.

House Bill 193, which deals with regulations similar to North Carolina’s Certificate of Need laws, would remove market entry or expansion barriers under COPN for some small-scale operations including outpatient surgery centers and medical imaging facilities.

Several Virginia hospitals are fighting the effort, arguing that relaxed regulations would reduce profits on some services that hospitals rely on to subsidize charity care as a means of maintaining their nonprofit status.

The Virginia Hospital and Healthcare Association is running television ads across the state in an effort to convince residents that reform of COPN would bankrupt local hospitals, putting lives at risk.

Those advertisements have been accompanied by a four-page letter from the VHHA to Virginia Gov. Terry McAuliffe, claiming that slumping state reimbursements and other factors are causing “serious harm to this key sector of Virginia’s economy. Virginia’s local hospitals and health systems simply cannot continue to absorb these reductions.”

But Delegate Kathy Byron, R-Bedford, counters that recent data reported to the IRS show Virginia’s leading hospitals, such as Inova Health System, are performing well, with net gains of $513 million during 2013 alone.

“Hospitals with local monopoly protection are gaming the system at the expense, quite literally, of their patients, and we are allowing it to continue,” Byron said Friday during a debate on proposed licensing reforms.

“The hospital industry opposes the elimination of the anti-competitive Certificate of Public Need because it says it can’t afford competition,” said Mike Thompson, president of the Thomas Jefferson Institute for Public Policy, a free-market think tank based in Springfield, Va. “The newly released financial numbers from the hospitals themselves clearly show this industry as a whole is doing very well. For it to say otherwise is simply not supported by the facts.”

Virginia’s fight against COPN laws matches efforts by North Carolina lawmakers to reform or repeal this state’s CON program. A full phaseout of the regulatory regime came up short during last year’s final budget negotiations at the General Assembly, but the upcoming session in April may see lawmakers ready either to remove CON oversight from certain services — such as the establishment of new same day surgery centers or the addition of inpatient psychiatric beds — or strip the law from the books entirely.

Follow this link to read more about the impact of CON laws in North Carolina.