Bluegrass Beacon: Certificate of need law stifles free market competition

By JIM WATERS
Bluegrass Institute for Public Policy Solutions

Friday, Nov. 30, 2018 — A few years ago, I stood in the Capitol rotunda and urged policymakers to rid Kentucky of its Certificate of Need plague since the policy amounts to nothing more than a government “permission slip” for new health-care providers to create and compete.

Now, after more than a decade of reformers pounding away on this issue – including myself frequently in this column – we’re beginning to see the patient revive.

The latest treatment is a State of Emergency declaration by the Bevin administration meant to encourage more ambulance service in underserved counties.

A new service in Elkhorn City, for example, means residents in that area of Pike County would no longer face two-hour wait times between a 911 call and an ambulance’s arrival.

Elkhorn City Mayor Mike Taylor has pushed for Certificate of Need reforms that allow new ambulance services for years and couldn’t be happier.

Yet some local officials in other parts of the state are less-than-pleased with the order’s designation that their counties face an “imminent threat to public health, safety, or welfare” simply because they only have a single ambulance service.

Bevin’s order also claims that a “public health crisis exists” in these counties, including in Warren County, where Judge-Executive Mike Buchanon – who’s helped lead the region during a period of unprecedented growth – claims that’s news to him.

For decades, the local government has had an exclusive arrangement with The Medical Center of Bowling Green to provide ambulance service for Warren County at no cost to taxpayers.

Buchanon says Med Center EMS has kept pace with the county’s explosive growth while saving taxpayers an estimated $100 million.

It’s news to me, too, and I’ve lived in Warren County for 19 years, during which time two daughters were born at TriStar Greenview Regional Hospital – whose affiliate Southern Kentucky Ambulance Service has now filed a Certificate of Need application with the Cabinet for Health and Family Services – and have yet to see a scintilla of evidence pointing to a “public health crisis.”

In fact, most counties envy Warren County’s health-care blessings, including its two hospitals and a plentiful number of providers, including myriad specialists.

Not that Greenview should be denied the right to compete for a piece of the ambulance-service pie.

The best regulatory policy is to always – always – let the local marketplace rather than some politician or bureaucrat in far-away Frankfort determine whether a county lacks adequate service or faces a “crisis.”

But let’s also be clear: If Greenview tries and fails with its ambulance service, it must not get any form of taxpayer-subsidized assistance.

Plus, the playing field must be level.

Greenview’s service must accept all patients regardless of their ability to pay – something local leaders are concerned it may try to avoid since these patients tend not to be profitable for a hospital’s bottom line.

Creating a fair playing field regarding these types of policies cannot be done without input of counties, who, since Kentucky’s Certificate of Need program was implemented in 1972, have had to operate within a thick regulatory environment while still fulfilling their state-mandated responsibilities of protecting public health and providing ambulance service.

But this whole Certificate of Need scenario confirms just how damaging the infection of intrusive and controlling government regulations are in creating a dysfunctional and unhealthy environment where each county is forced to navigate through complex and complicated rules while meeting the needs of its constituents, all without making a sick patient even sicker.

Unfortunately, dysfunction has permeated our health-care policymaking to the point that it now feels normal.

But vibrant markets and more thoughtful, effective and well-informed regulatory policies will help Kentucky create a badly needed new normal.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

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