One Way To Keep Medical Costs Down

The News & Observer, a newspaper located in Raleigh, North Carolina, posted an editorial yesterday about one rather obvious way to lower medical costs in North Carolina. It is an easy solution–except for the fact that there are corporate interests who do not like this solution.

The editorial explains:

One important element of the budget recently passed by the N.C. Senate would lower health care costs by reforming North Carolina’s Certificate of Need law and increasing the number of same-day surgery centers across the state.

Currently, North Carolina has one of the most restrictive CON laws in the nation. The Senate proposal would save patients about 40 percent in costs when centers are allowed to be built.

Certificate of Need laws started in the 1970s with the goal of keeping hospitals from overbuilding facilities and acquiring unnecessary hospital equipment – both actions thought to increase costs for consumers. Unfortunately, these CON laws ended up essentially increasing costs because competition was eliminated. In 1987, the Reagan administration recognized that CON laws were a bad idea and spoke out against the federal mandate for CON. States began to repeal CON restrictions.

Today, 71 percent of all surgeries are outpatient or same-day surgery. Of those surgeries, too many – 72 percent – are performed at the highest-cost hospital system facilities.

One very basic example of an outpatient clinic that saves time and money and improves the quality of medical care is in the area of cataract surgery. As our population ages, many Americans face cataract surgery. With today’s medical practices, this is generally very simple and uncomplicated surgery. It is very easily done at an off-site medical facility. In Massachusetts, Surgisite Boston is a facility used by 70 ophthalmologists from throughout the region. The center aims to best serve both patients and physicians by acting quickly to adopt new technologies and create a comfortable, accessible environment for treatment. Having the center outside of the hospital cuts the costs for patients, and because of the specialized nature of the center, allows for the newest technologies. It also allows the surgeons to share the cost of the latest equipment and to offset that cost by having the equipment used every day.

The editorial explains other aspects of the debate:

The Federal Trade Commission staff supports CON reform in North Carolina that allows the freedom to build independent, nonhospital surgery centers that lower costs. The FTC states that “CON laws raise considerable competitive concerns and generally do not appear to achieve their alleged benefits for health care consumers” and that “CON laws can restrict entry and expansion, limit consumer choice, and stifle innovation.”

Cost analysis by Blue Cross Blue Shield NC shows patients across the state are paying way too much – sometimes more than double what others are paying – for many surgical procedures:

▪ An ACL repair by arthroscopic surgery in the Charlotte area cost $9,710 at a nonhospital ambulatory surgery center in Concord while the same procedure cost $29,565 at a hospital-run outpatient facility in Charlotte.

So what isn’t the introduction of surgical centers in North Carolina an easy solution to rising health care costs? Unfortunately hospitals like having a monopoly on surgical procedures. Hospitals are telling their employees that if surgical centers are built, the employees will lose their jobs. This is not true, but unless an employee actually takes the time to investigate what surgical centers will do, they will oppose the centers in order to keep their jobs. During a recent visit to Raleigh, one of our state legislators showed me the pile of mail he had received opposing changes to the “CON” law. Oddly enough, much of the mail opposing the changes came in business envelopes with hospital return addresses printed on them. There were two significant piles of mail from people who worked for hospitals who feared losing their jobs.

Changing the “CON” law should be an obvious thing to do. However, when hospitals have a monopoly on surgical procedures both simple and complex, they are reluctant to give up that monopoly. Unless the healthcare consumer becomes more aware of why healthcare costs are rising, things like the “CON” laws will continue to stifle competition in medicine. It is up to the consumer to help fight the monopoly that prevents North Carolina from having the surgical centers it needs.