April 12, 2022
The Joint Legislative Committee on Access to Healthcare and Medicaid Expansion convened on Monday to discuss Certificate of Need (CON) laws in North Carolina. The committee heard from presenters both in favor of and in opposition to reforming CON in the state.
Dawn Carter, Senior Partner with Ascendient Healthcare Advisors, first spoke on the importance of preserving CON laws in North Carolina. Carter argued that CON helps promote the distribution of healthcare services throughout North Carolina, especially in rural areas, and that CON states like North Carolina have better and more efficient access to hospitals. Carter also discussed the important role of CON during the pandemic, and that the state’s laws did not impede the addition of hospital or inpatient bed capacity when needed and did not impact the availability of beds during pandemic peaks. Other data shows that North Carolinians have better or sufficient access to Ambulatory Surgery Centers and MRI services, along with strong access to specialized imaging, such as PET, including in more rural areas of the state.
Carter also noted that North Carolina provides a higher percentage of uncompensated care than states without CON. When looking at health equity and cost of services, states without CON are less diverse and typically pay more for healthcare services. Carter pointed out that North Carolina currently has the 13th lowest inpatient payment rate in the US, and that payors would pay almost $1 billion more per year for hospital inpatient services if the state were to repeal CON laws. CON also ensures equitable access to healthcare services in rural communities, Carter argued, since the repeal of CON laws in other states has allowed hospitals to expand in more affluent suburban communities.
Brian Floyd, President of Vidant Medical Center & Chief Operating Officer of Vidant Health Hospitals, spoke about protecting rural access to care through CON. Floyd gave an overview of the current state of rural health care in North Carolina and highlighted how rural hospitals are economic engines for communities. Rural hospitals have lower operating margins with less commercial paying business and different social determinants of health, and rely on revenues from outpatient surgeries to offset losses from other hospital operations. If CON laws were repealed, other healthcare businesses could cherry-pick highly profitable services from these hospitals, placing further challenges on rural hospitals and potentially leading to the closure of many rural facilities.
Matt Mitchell from the Mercatus Center at George Mason University, spoke in favor of repealing CON laws and compared access, cost, and outcomes between CON and non-CON states. Mitchell argued that CON increases healthcare spending, decreases access to care, and reduces quality of care. Allison Farmer, CEO of EmergeOrtho, also spoke against CON laws and highlighted the challenges that independent physician-owned practices face because of CON. Farmer argued that CON stifles access to care and diverts patients to higher-cost facilities like hospitals. Legislators were interested in learning more about EmergeOrtho’s payor mix and charity care provided to patients in contrast to nonprofit hospitals’ charity care requirements.
Sal Nuzzo, Vice President of Policy at The James Madison Institute, presented on a case study in Florida where many CON laws have been repealed. Nuzzo explained that the repeal of some CON laws allowed hospitals to build more facilities throughout the state in hard to reach and underserved areas. Nuzzo encouraged lawmakers to phase out CON laws and to look at requirements for different types and facilities, beginning with facilities and services that provide low cost care and least likely to be overused. He also suggested gradually increasing the number of CON applications that are approved, and to look at a partial repeal first. Nuzzo warned against replacing CON laws with similar restrictions on construction or creating formulas that determine an area’s needs.
Chip Baggett, Executive Vice President and CEO of the NC Medical Society, switched gears from CON to discuss the NC Institute of Medicine’s “Healthy North Carolina 2030” plan. The plan brings together experts and leaders from multiple fields to inform the development of a common set of public health indicators and targets for the state over the next decade. These indicators will serve as the population health improvement plan for the NC Division of Public Health. With a focus on health equity and the overall drivers of health outcomes, these indicators and targets will help drive state and local-level activities, provide a springboard for collaboration and innovation, and develop a new vision for public health in our state to improve the health and well-being of all people of North Carolina.
First steps in the plan include decreasing the uninsured population, decreasing the number of people living in poverty, and improving third grade reading proficiency. These issues are inextricably tied together and can have a great influence and ripple effect on healthcare outcomes. Baggett explained that there are many different levers for change, with a variety of proposed policy changes included in the plan. Baggett also emphasized the need for preventative care and focusing on social determinants of health and local collaborations.
The committee meeting concluded with a presentation from Greg Griggs, Executive Vice President and CEO of the NC Academy of Family Physicians, on the role of family physicians in North Carolina’s healthcare workforce. Griggs discussed the importance of family medicine physicians in providing primary care services across North Carolina. Many communities in North Carolina lack access to primary care physicians and sub-specialty physicians. Based on Health Professional Shortage data, there is a need for about 400 more primary care providers to remove all primary care HPSA designations in North Carolina.
Healthcare professionals in primary care earn over 50% less than their sub-specialty colleagues but have the same debt burden. Griggs recommended a comprehensive and sustained approach to this issue, including building up the workforce pipeline from an early age in rural areas, eliminating barriers to health professional school and reducing the debt burden for providers. Rather than a debt repayment program for providers who practice in rural communities, Griggs suggested funding up front scholarship programs beyond the existing loan repayment programs. Griggs also encouraged more rural teaching sites and rural training tracks.
The committee plans to host its final meeting before short session on April 26th at 9:30am. A live-stream of the meeting can be viewed here.