Alabama’s Certificate of Need Law

Wow!

With what I know about Alabama’s CON law, I could write volumes! And then, the title’s enough to get me started. I decided to use the “KISS” principle – Keep It Simple, Stupid.

If you’re a follower of Alabama politics – even casually – then you most likely have heard of, or remember former Governor Don Siegelman and former HealthSouth CEO Richard Scrushy being convicted jointly of a “quid pro quo,” or more exactly, Siegelman was accused of accepting Scrushy’s bribe… to sit on the CON Board.

Never mind that the FBI extensively coached a known perjurer about what and how to testify – itself an illegal act – and never mind that Scrushy was appointed by two governors of two different parties to sit on the CON Board, and publicly expressed disdain for serving again. But that’s all water under the bridge. I only mentioned that because of its poignancy, and is relative to this post.

I sincerely doubt that most folks know that in Alabama, at least, not just anyone, or any organization can decide to build a hospital. For example, if Warren Buffett and Bill Gates decided that together, they wanted to gift the good people of Alabama with a hospital, they could NOT do it.

Why?

Read on to find out!

The following is a letter I’d composed February 13, 2009 and sent to the Alabama Governor’s Office (whom at the time, and of this writing is Bob Riley – R, Ashland), and later sent to several Alabama State Representatives and Senators explaining the cumbersome law and how it damages patient health.

Without further ado…

Representatives and Senators,
Ladies and Gentlemen,

Having recently contacted the governor’s office on this issue, I will be concise.

The people of Alabama could be better served by abolishing the Certificate Of Need Board.

I would like you all to collaborate and unite on this issue to better serve the people of Alabama.

The CON law process establishes a naturally adversarial role at the outset, and forces healers and healing organizations (hospitals) to unnecessarily spend money that could be better spent on healing and healthcare of the communities they serve. Purchases of equipment, medicine, nurse and physician staff whom all attend to the ill, are but a few of the fundamentally better and higher uses to which such money could be used.

Instead, money that could and should be used for healing is used for fighting lengthy, prolonged and unnecessary court battles. Instead, money that could and should be used for the health of the community is put into attorneys’ pockets.

I am not opposed to attorneys, and often say that “everyone hates attorneys… until they need one.”

However, I am opposed to the CON process because I believe it forces healthcare and healers to waste money, time and energy when those resources could be better utilized and more appropriately used for healing.

Analogously, it’d be like a man being forced to go before a judge and beg, “Please, your honor – may I build a grocery store to feed these hungry people!?!”

Historically, the Congress of the United States enacted the CON law in an attempt to control health care costs in 1975. After receiving a report from the Government Accounting Office (now known as the Government Accountability Office), which is the investigative arm of Congress, they quickly repealed the law in 1986. Congress held out the proverbial “carrot-on-a-stick,” threatening to withhold federal funds if states did not comply. The only state that did not enact any type of CON law was Louisiana.

Several states have followed suit, and completely abandoned the now-non-existent federal CON law requirement. As of 2007, only 37 states had any form of CON law, and only 27 states had CON law for acute care hospital beds.

Even the United States Federal Trade Commission and United States Department of Justice in a joint 2004 study denounced CON laws as “anti-competitive,” writing that they “pose serious anticompetitive risks that usually outweigh their purported economic benefits.” (“Improving Health Care: A Dose of Competition,” July 2004)

As a recent case in point, Huntsville Hospital (a not-for-profit) and Crestwood Medical Center (a for-profit) spent untold hours and very easily millions of dollars, fighting with each other over whom would be the “chosen one” by a judge to build a hospital to serve the medical and healthcare needs of a growing Madison city community.

Were there no CON law, both hospitals could have faced competition from a third entity which would have provided additional healthcare resources to the growing metropolitan city of Madison. Hospitals, their administrators and boards, whether for-profit or not-for-profit, are the ones best suited to decide whether or not to expand their services and construct additional facilities to meet the healthcare needs of communities, not administrative law judges.

On March 8, 2005, the House Committee on Ways and Means of the United States House of Representatives received testimony from Sean Parnell of The Heartland Institute of Chicago, IL, a non-partisan research institute, whom addressed the then soon-to-expire provisions of CON law for physician-owned specialty hospitals.

Citing extensive research by experts in the field of law and healthcare policy, his testimony in part referenced reports by the GAO, FTC, DoJ and other federal and state agencies, all which pointed to the uselessness, cumbersomeness and unnecessary taxpayer burden that CON laws imposed on states and healthcare organizations, public and private, and the deleterious effects of artificially inflated healthcare costs, and limitations upon delivery of healthcare, both which CON laws foster.

For these reasons and more, I urge you all, in this time of growing concern for the condition of our state, local and national economies, and the increasing numbers of adults and children whom have no or limited access to healthcare and or limited ability to provide for the same, to the greatest extent allowed by law, to abolish the Alabama Certificate of Need Board, its laws and regulations concerning the same.

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Now, if you think I’m kidding, don’t know what I’m talking about, or attempting to “blow smoke” somewhere, I encourage you to check out these Official State of Alabama Health Planning and Development Agency (SHPDA) websites that mention Alabama’s CON law.

Certificate of Need Process Forms

http://shpda.alabama.gov/condivision/forms.aspx?sm=d_a

Certificate of Need Flow Chart

http://shpda.alabama.gov/documents/conforms/CON%20Process%20Files/Old/CON%20Process_frame.htm

Flow Chart for Alabama’s Certificate of Need Process

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UPDATE: 22 June 2010
Alabama Representative Mike Ball, R-Madison, in conjunction with four other co-sponsors – Reps. Cam Ward, R-Alabaster, James Martin, D-Clanton, among them – has twice introduced legislation that would eliminate Alabama’s Certificate of Need law.

Rep. Ball said, “The system as it is right now is broken. It is a tremendous detriment to areas of growth in Alabama that need health care services.”

Danne Howard, Vice President of Government Relations for the  Alabama Hospital Association said, “We support CON.”