Last year, Nebraska became the first state to pass a public disclosure law governing the sale of not-for-profit hospitals to for-profit companies.
This year, it became one of the first states in years to effectively repeal its certificate-of-need oversight of hospital expansion.
The first is a regulatory approach aimed at keeping for-profit companies out of Nebraska. The second is a return to the open market that could boost for-profit healthcare enterprise.
The turnabout, according to observers, reflects a confluence of forces: the fierce lobbying of individual hospitals once burned by the CON process; a new anti-government Legislature backed by the state's lieutenant governor; and an insurance industry more worried about monopoly power than excess capacity.
But the conflict between the two laws isn't as sharp as it seems. At the wire, the Nebraska Hospital Association inserted some amendments to the CON bill to protect its members against rapid for-profit expansion.
One amendment maintains CON reviews through Jan. 1, 1999, for ambulatory surgery centers in counties with populations of 30,000 to 60,000 and through September 1999 for surgery centers in smaller counties.
The NHA also won a two-year moratorium on new, and in some circumstances relocated, acute-care hospital beds.
After that, both for-profit and not-for-profit groups can pretty much build at will in Nebraska, although for-profits still won't be able to buy not-for-profit facilities without state review.
Only long-term-care and rehabilitation beds will remain under continued CON review.
Nebraska's unicameral Legislature passed the measure June 5 by a 37-5 vote, and Gov. Benjamin Nelson signed it into law June 11. It becomes effective in early September.
Like other states, Nebraska instituted a CON review process in the 1970s to stem duplicative investments in equipment and facilities that were leading to higher healthcare costs. The process requires hospitals to convince state regulators that their proposed investments are necessary.
Over 19 turbulent years, the state CON committee approved about $1.2 billion worth of projects and rejected about $290 million worth, surviving several attempts to repeal it.
Among its rejections was a clinic planned by 78-bed Memorial Hospital in Aurora, which eventually won its appeal of the CON committee's decision. But the process cost the hospital $40,000 and a year of delays, according to news reports.
Bishop Clarkson Hospital, a 201-bed facility in Omaha, also endured a delay in its clinic plans. Bishop Clarkson once planned a sale to for-profit Columbia/
HCA Healthcare Corp. Although it received CON approval, it later scrapped its plans. Shortly after, the state enacted its law requiring additional approval of sales to for-profit companies.
Both hospitals lobbied aggressively for CON repeal, according to state Sen. Don Wesely of Lincoln.
Wesely helped craft the CON law as a freshman senator in 1979, and he remained its fiercest advocate as chairman of the Legislature's Health and Human Services Committee.
He now predicts Nebraska will see a flood of projects within the next year.
The CON law was repealed in a year in which a major hospital lobby, the Nebraska Hospital Association, pledged to leave the process alone. The NHA, which promised Wesely it would back off CON in 1997 in return for some 1996 changes in the law, stayed neutral in the campaign until the end, said Roger Keetle, senior vice president and general counsel of the NHA.
It then pressed for some moratoriums to give hospitals more time for strategic planning, Keetle said. But on the CON issue as a whole, its membership was deeply divided, he said.
The move to repeal CON began with a bill to exempt 208-bed St. Elizabeth Community Health Center in Lincoln from CON so it could start an open-heart surgery program. The bill turned into a repeal effort with the support of two senators-one liberal, one Christian right, but both driven by complaints of local hospitals.
Lt. Gov. Kim Robak also came out in favor of dumping the process. Robak said she lost faith in CON when she served on a state commission reviewing the process two years ago. "I have a strong belief that programs need to be accountable," Robak said. "It was extremely frustrating to me that there was no way to measure if CON was helpful."
Because the membership of the health committee had become more conservative, the CON bill made it to the floor of the Legislature, which is predominantly anti-regulation, Keetle said.
Since the insurance industry didn't come out in support of the CON process, there was little pressure to keep it in place, he added.
As of September, Nebraska hospitals can move forward with service expansions and equipment purchases without the need for state approval.
The biggest winners include:
Bryan Memorial Hospital in Lincoln, which has four projects on the table, including a merger with the city-owned Lincoln Hospital. The 316-bed hospital also plans to run a helicopter service and build a medical office building, both of which were rejected by the CON committee.
Douglas County Hospital in Omaha, which can go ahead with a $5 million project for long-term-care and psychiatric beds thanks to a clause in the law that exempts projects backed by a public vote. Although county voters approved $8.5 million in bonds to finance the project, it didn't win CON approval. Then the state director of licensure and regulation tried to overrule the committee by issuing a CON to the 329-bed hospital. The state attorney general subsequently threatened to challenge her authority in court, but the matter was dropped as the CON repeal progressed through the Legislature.