Study: CON’s hurt health

Hospital patients die at higher rates from some common maladies in states that require providers to obtain a certificate of need for certain medical services, a new study concluded.

Thomas Stratmann and David Wille of the Mercatus Center at George Mason University authored a working paper titled “Certificate-of-Need Laws and Hospital Quality” that also determined that the quality of hospital health care in states with certificate of need laws often is inferior to that in neighboring states without the restrictive mandates.

“The average 30-day mortality rate for patients with pneumonia, heart failure, and heart attack who were discharged from hospitals in CON states was 2.5 to 5 percent higher than that of their non-CON-state counterparts,” the authors said in a news release accompanying the report.

“The largest difference is in deaths following a serious post-surgery complication, with an average of six more deaths per 1,000 patient discharges in CON states,” they wrote.

“Further, our findings provide some evidence that CON regulations are associated with lower overall hospital quality, although the corresponding point estimates are not always precise,” the report stated.

With 25 separate CON rules, North Carolina ranks No. 4 among the 36 states and Washington, D.C., that impose such mandates. While North Carolina hospitals did not figure into the study, the authors say their findings are applicable to the state.

“The fact that certificate of need laws are associated with higher mortality, it’s troubling, and it’s serious, and I think this, on top of all of the other recent research showing how terrible these programs are in achieving their goals … should come as a wake-up call,” Christopher Koopman, a Mercatus Center research fellow who has researched CON laws on a national scale, told Carolina Journal.

“This should come as a siren to health care reformers that this is more than dollars. This is more than the health care prices, and health care spending. These are real human lives on the line,” Koopman said. “There is a human element to all of this.”

“We are still evaluating the report,” Julie Henry, vice president for communications at the North Carolina Hospital Association, said in response to the Mercatus Center findings.

“Because the previous Mercatus reports were filled with inaccurate information, NCHA will do a thorough analysis before commenting,” she said. She was unable to say when a response would be forthcoming.

“All of the Mercatus Center’s research is held to the highest academic standards, including our work on certificate of need,” Koopman said. “We welcome any discussion that it generates, and are always happy to address questions, or take part in debates that result from our work.

Koopman said the higher mortality rates at hospitals and the diminished health care quality in CON states is “probably going to come as a surprise to many people because the chief justification for certificate of need laws is that it increases the quality” by channeling a higher volume of patients into a select system, supposedly increasing expertise.

The CON drag on health care quality found in the study is similar to what happens in any industry that is heavily regulated, infused with price controls, and protects incumbent providers, Koopman said.

“In a more competitive environment, the highest quality, lowest price will win. But when you have a less competitive market, one where entry into the market is restricted by certificate of need, what you end up with is providers that no longer have to focus as much on quality as they otherwise would in a more competitive environment,” Koopman said.

The study builds on past research, but employed an innovative design approach. It drew its comparisons using Health Referral Regions — generally large metropolitan areas that sprawl across state lines. There are 306 regions of this type in the country.

The study developed a subset of 39 border-straddling Health Referral Regions comprising CON and non-CON states. They were chosen using the assumption that health market conditions on each side of the border tend to be fairly consistent.

The research also controlled for demographic factors such as age, income, education, and ethnicity, and still reached similar findings.

The study, covering 2011-15, analyzed data from Hospital Care, a database built using information from the Hospital Quality Alliance, whose members include the American Hospital Association, American Medical Association, and U.S. Chamber of Commerce.

The Centers for Medicare and Medicaid Services maintains Hospital Compare, which contains more than 100 quality indicators from more than 4,000 Medicare-certified hospitals. The study looked at more than 900 hospitals.

Hospital readmissions and mortality rates representing “some of the most common, costliest, and most variable factors affecting individual hospitals’ performance” were used, the study said.

North Carolina hospitals were not part of the study because every state surrounding it also has CON laws, so a comparison to non-CON border states was not possible.

The study authors offered one caveat to their empirical approach: Quality of care at hospitals in CON states might improve if they had to compete with hospitals across the border in a non-CON state. And that could be bad news for North Carolina.

“Given that our approach still finds a quality differential despite this caveat, hospitals in CON states outside [Health Referral Region] market areas may provide even worse quality than hospitals in CON states that are competing with hospitals in non-CON states in the same market,” the authors wrote.

Although North Carolina did not figure into the study, “The key finding of the paper is still something that North Carolina policymakers, and people interested in health care reform should take note of,” Koopman said.

Dan Way is a staff writer for the Carolina Journal.

Dan Way is a staff writer for the Carolina Journal.

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