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Why we need certificate of need

RALEIGH — Jim Davis is right about this much: Hospitals in North Carolina shouldn’t be using any monopolistic muscle to try to prevent competition that will benefit patients and the larger public.

The freshman state senator and orthodontist from Macon County is wrong on another score. “Health care is a business …,” Davis recently told The Asheville Citizen-Times.

It’s not a business, in any traditional sense, and that’s why North Carolina employs the Certificate of Need laws that are now the subject of a review by a House study committee.

Davis, in his comments to the Asheville newspaper, was reflecting on whether Mission Hospital in Asheville had used the Certificate of Need laws and something called a Certificate of Public Advantage to hold down competition.

The result may have been less competition. Certificate of Need laws are designed to do just that, prevent competition that has the effect of inflating rather than driving down costs.

The laws require that hospitals and other major medical providers receive permission from the state before they build new wings or add multi-million dollar pieces of equipment like MRI machines.

If that sounds like socialism, let me clue you in on a little secret: Health care in America is and has been for a long time a quasi-socialist enterprise.

The biggest providers of health care, the hospitals, were largely built by you, the taxpayers. Bonds paid off by taxpayers allowed for the construction of many hospitals across this state and across this country; charitable contributions, with their associated tax breaks, paid for most of the others.

Non-profit hospitals continue to be treated, for tax purposes, largely as charities. In North Carolina, hospitals did begin paying a provider tax last year, but even that tax helps them to leverage more federal Medicaid dollars.

Big chunks of the revenue flowing into and through the hospitals come from government programs, Medicaid and Medicare. Nearly three out of four inpatients treated at North Carolina hospitals are either government beneficiaries or indigent.

Tax dollars pay for their treatment. Tax dollars feed the health care system.

Health care may be big money. It isn’t business, where the market operates freely and consumers make informed choices about goods and services that they purchase, typically from multiple vendors.

If someone wants to try to create that kind of system, the first order of business would be repaying me, with interest, the tax dollars that my parents, grandparents and great-grandparents paid to build Wake Medical Center.

Until then, Certificate of Need laws are a necessary evil to ensure that medical facilities aren’t overbuilt and that taxpayers or patients aren’t stuck with unnecessary costs.

A review of the laws may be warranted. Perhaps there are occasions when rulings thwart competition that would be good for patients and taxpayers.

But the last thing our health care system needs are cardiac centers with no patients and multi-million dollar imaging machines that sit idle.

Scott Mooneyham writes about North Carolina politics for the Capitol Press Association.

By Scott Mooneyham

Syndicated Columnist

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