Dr. Mark Monteferrante didn't think it would be so hard to help his radiology group's office in Northern Virginia buy a second MRI machine in 2003.
But it took five years and more than $175,000 in lawyers' and other fees to get that second machine. The reason? Virginia's certificate-of -need law, which requires owners of medical facility-care projects to prove public need and get approval for their projects before embarking upon them.
The program is meant to contain healthcare costs, but Monteferrante argues it hurts patients by stifling competition. He now wants to start a new radiology practice in Virginia, but he isn't willing to risk another arduous CON process.
“Competition is a good thing, and the fact that we've got a system that inhibits that, it's un-American,” he said. “It's ridiculous.”
Monteferrante and another doctor, backed by the Institute for Justice, a public interest law firm that focuses on individual liberty and limited government, sued state officials over the state's CON law in 2012. Last week, the 4th U.S. Circuit Court of Appeals ruled against the doctors. They're not yet sure whether they'll appeal their case to the U.S. Supreme Court.
Clashes over CON laws, however, aren't just playing out in courts.
For years, the Federal Trade Commission and the U.S. Justice Department have pressed states to abandon the laws, decrying them as bad for competition. Many states have also engaged in seemingly endless debates over the matter. But none of these efforts—whether through courts, politics or federal agencies—have led to much change. Thirty-five states and the District of Columbia still have CON programs.
The laws' critics say state hospital associations have wielded their political power to keep certificate-of-need programs in place, shielding incumbent hospitals from costly competition.
“They can keep competitors out,” said Frank Sloan, a professor of health policy and management and economics at Duke University. “The public doesn't care much about it.”
James Blumstein, a professor of health law and policy at Vanderbilt Law School, said CON programs are of little value in the current healthcare system, which no longer relies on cost-based reimbursement.
But hospital associations say the laws are still relevant because they ensure quality healthcare services and protect safety net hospitals.
“There is not a free market in healthcare because so much of the healthcare market is governed by reimbursement rates set by the federal and state government,” said Allan Stalvey, an executive vice president at the South Carolina Hospital Association. “It protects hospitals that provide services that other people don't want to provide.”
Decades ago, CON laws were even more popular. Many states enacted them in response to the federal Health Planning Resources Act of 1974, which tied federal funding to the laws. That act, however, was repealed in 1987, leading 14 states to eliminate their CON programs, according to the National Conference of State Legislatures.
CON critics in many states have continued to fight to erase the programs, but without much success.
“Every year there are numerous bills filed that would address pieces of, or all of, certificates of need,” said Richard Cauchi, a program director in health at the National Conference of State Legislatures. “The outcomes are often noticeably smaller or more modest.” Last year, lawmakers introduced at least 14 such bills in six states. No state has repealed its CON law since Indiana eliminated its program in 1999.