State lawmakers are once again aiming at the major regulatory pillars of North Carolina's healthcare competition.
The Senate Health Committee on Wednesday discussed Senate Bill 370 and a wide range of bills to repeal the rules. This requires state officials to analyze whether new equipment or facilities are required in a particular area before approval is made.
The North Carolina Healthcare Association is a hospital lobbying group that strongly supports maintaining the certificate law, writing in its 2024 legislative summary that “the law ensures access to care for medically unserved populations and prevents oversupply that can lead to increased patient health costs.”
But opponents of the rules say they will curb competition.
Republican-controlled state legislatures have lacked Need Certificate Act in several small ways in recent years, including some changes passed as part of a 2023 deal to approve the expansion of Medicaid.
However, broader efforts to completely repeal the law have been hit down in the face of intense lobbying by the hospital industry. Senate Republicans hope for a different outcome in 2025.
“The CON system we set in the 1970s has failed and is no longer applicable,” Sen. Benton Saury, Sen. R-Johnston, said Tuesday.
A complex issue this year is development from outside the legislature. The unanimous decision from the North Carolina Supreme Court is to allow advances in cases that end with a certificate of necessity law that is found to be statewide unconstitutional.
Sen. Ralph Hise R-Mitchell said he expects the system to eventually be overthrown in court, but that Congress believes it should move to close the system more quickly. And R-Harnett Sen. Jim Virgin said he was on the board of directors reviewing the required certificates. He saw first-hand how hospitals spend millions of dollars on legal costs to fight years of fighting in their backyard competition. Removing the rules only leads to positive outcomes for patients, Virgin said.
The hospital's lobby on Wednesday criticized lawmakers for using social media to change the system. The Healthcare Association wrote that repealing the required certificate rules “has threatened to increase instability across the health market sector during a period of great uncertainty due to the federal government's proposal to cut back on critical healthcare programs.”
Several smaller groups within the broader healthcare facility sent representatives to the committee on Wednesday to talk about the bill. Their comments reflect widespread discrepancies, even within the system. The Hospice Group is in favor of the change. Radiologists oppose it.
Most states, including North Carolina, use the required certificate laws to regulate the healthcare industry. If a hospital company wants to build a new hospital, the state government must approve the plan. If a hospital or local clinic wants to buy expensive new equipment, they will need the state government to approve.
The theory is that by forcing healthcare providers to prove that new services or tools are in fact needed, the “needs” of a “certificate of needs” can therefore stop unnecessary spending that state regulators pass on to patients in the form of higher bills.
Some powerful lawmakers view certificate rules as outdated or non-American. Because rules curb free market competition and give governments too much power to the healthcare industry.
In response, hospital executives have been lobbying heavily to Congress to maintain these rules, ensuring that they don't shake up an industry that major lobbying groups estimate is worth $40 billion a year. The state Department of Health and Human Services issues a necessary certificate decision and can appeal.
These appeals often lead to years of legal battles where billion-dollar hospital chains are advantageous over small businesses and individual physicians who don't have the same type of legal budget.
