by David Williams
In today’s healthcare landscape, access to affordable and high-quality healthcare services remains a pressing concern for individuals and families. It is especially important during these economically turbulent times that the government spend taxpayer dollars wisely and on programs that actually offer real value to taxpayers.
Tennessee offers a cautionary tale about wasting taxpayer money on ineffective and harmful bureaucracy. In the Volunteer State, Certificate of Need (CON) laws play a significant factor in preventing free-market competition. In the worst cases, it allows entrenched interests to operate as monopolies. CON laws erodes patient choice by eliminating affordable options in the marketplace and patients suffer the consequences.
Many Tennessee taxpayers are unaware of Ballad’s participation in a government-funded and operated scheme that harms patients and weakens the health care system broadly. CON laws require private health care companies to demonstrate a “need” for the services they will offer in a community.
This “need” is determined by 12 unelected, unaccountable government bureaucrats who oversee the approval process. The COVID-19 lockdowns taught the country how much power these unelected bureaucrats have and the damage they can cause on so many critical issues. This extends to the economy, children’s education, and health care when they are allowed to impose their will over the public on the taxpayer’s dime.
The CON approval process is wrought with government red tape and bureaucracy that is its own barrier to entry. Worst of all, it rewards those who are most able to put their fingers on the bureaucratic scales as opposed to those offering the best services. These same entrenched interests often work to keep new competition from offering healthcare in the service areas where they operate, creating a functional monopoly.
One example of this in Tennessee is Ballad Health. Today, the 21-hospital system operates in 29 counties across Northeast Tennessee, Southwest Virginia, Northwest North Carolina and Southeast Kentucky. The system is a dominant force in the region, operating unchallenged in multiple counties. Its stronghold on the market has effectively stifled competition and leaves patients with very limited alternatives regarding their healthcare needs.
At a June 12 meeting on Ballad Health’s compliance with its Certificate of Public Advantage (COPA), Tennesseans from around the region voiced their concerns about how Ballad Health’s functional monopoly was impacting access to care.
Ballad has weaponized CON laws to their benefit, wielding its ability to oppose CON applications from small, independent healthcare providers to stifle competition and protect its monopoly in Tennessee that weakens our healthcare system and harms patient health outcomes.
Last year, a single cardiologist attempted to open an independent, outpatient cardiac catheterization lab in Johnson City, Tennessee. The only competition, Ballad’s lab at Johnson City Medical Center, was “significantly understaffed,” making patients wait upwards of “thirty to sixty days for procedures that ordinarily would have been done in a week.” Despite initial Tennessee Health Facilities Commission approval and an affirmation that “a new lab would improve access for patients, reduce cost and provide an alternative choice,” Ballad moved to block the new facility.
A Ballad-owned competitor used a similar tactic in 2020 to block an orthopedic group’s construction and opening of an “ortho-only” surgery center near Tennessee’s Tri-Cities Airport. Proponents for the new surgery center outlined how the “center [would] bring less expensive, higher quality options for procedures such as total hip and knee replacements, along with other orthopedic surgeries.” Compared to in-patient procedures, outpatient joint replacements typically cost 30 percent less.
Nearly 60 years ago, CON laws were initially implemented to promote rational planning and prevent unnecessary duplication of services. However, in practice, CON laws have been anything but rational. The Mercatus Center found that “residents of CON states are more likely than residents of non-CON states to travel further to obtain medical services.” They also allow entrenched interests like Ballad Health to stifle competition. This limits patient choice, and reduces access to health care service, particularly in areas of Tennessee that need it most.
A recent Beacon Center of Tennessee study found that CON laws have cost the state 63 additional hospitals, including 25 in rural areas. Overall, CON laws have denied 5.5 million Tennessee residents access to healthcare services. They have also cost the state almost three-quarters of a billion dollars in direct investment in local communities. As these examples show, more competition is best for patients. Taxpayers shouldn’t be on the hook to fund bureaucratic red tape that actively harms their health care system.
Governor Bill Lee and the state legislature led the way to begin much-needed reform two years ago, but more is needed to ensure these cronyist systems no longer exist. Repealing CON laws during next year’s legislative session will allow the free market to work and protect Tennessee taxpayers by increasing access to affordable, high-quality care.
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David Williams is president of Taxpayers Protection Alliance.
