An Illinois regulatory board's selection of one hospital plan over another in northwest suburban McHenry County raises questions as to whether the state — rather than the market — should decide the fate of health care projects.
The Illinois Health Facilities and Services Review Board this week rejected for a second time Janesville, Wis.-based Mercy Health System's application to build a $115 million hospital in Crystal Lake. The decision follows the board's earlier approval of Centegra Health System's proposal to construct a $233 million hospital in nearby Huntley.
The decisions, if not overturned by a possible court challenge, leave Crystal Lake-based Centegra the apparent winner in the lengthy and costly regulatory battle.
In its nearly 40-year history, the board has seen more than its share of corruption and political scandal, which prompted the 2010 passage of legislation intended to reform an agency whose key purpose is to regulate construction projects to prevent duplicating health care services.
Reforms aside, critics blast the facilities board as a relic of a bygone health care environment that has outlived its usefulness. The market does a better job of picking winners and losers than a group of nine gubernatorial appointees, critics say. Requiring health care providers to obtain a “certificate of need” before starting construction insulates existing medical providers and tamps down the competition that would put a dent in rising health care costs, they say.
“There are all kinds of benefits of allowing newcomers to enter the market and ignoring the voices of incumbents who will use entry regulations to protect the status quo,” said health economist David Dranove, a professor at Northwestern University's Kellogg School of Management.