Legislators hear from groups in favor of keeping certificate of need

The federal government considers Northern Kentucky to be part of Greater Cincinnati’s healthcare system, said Nancy Galvagni, the president of the Kentucky Hospital Association. Whether that’s a good thing was open to debate at the Kentucky Legislature’s certificate of need task force on Monday.

Galvagni’s statement was in response to freshman NKY legislator Rep. Marianne Proctor (R-Union) asking why the fastest-growing region in the state only has one healthcare system. 

The healthcare market is inside the I-275 beltway that runs through Northern Kentucky and Greater Cincinnati, said Jim Musser, senior vice president of Policy and Government Relations of the Kentucky Hospital Association.

“There are a dozen hospitals right across the river and tens of thousands of people that drive across that border every day, so you know it’s not an impediment to people getting care there if they prefer to go to Cincinnati,” Musser said. “There’s plenty of competition.”

After the interim meeting — held between legislative sessions where legislators discuss topics that might be included during the 2024 General Assembly — Proctor said NKY is being lumped in with Cincinnati. 

“We’re not Cincinnati and I’m not OK with 20 to 30% of our healthcare dollars going across the river,” Proctor said, elaborating that some don’t have insurance or can’t go across the river to get healthcare. 

Proctor, who filed a bill to repeal certificate of need in NKY during the 2023 legislative session, was referring to St. Elizabeth, which has dominant healthcare status in the region but isn’t the only healthcare provider in NKY. 

The meeting Monday was the second for the Kentucky legislature’s Certificate of Need Taskforce, a group created to study the decades-long Kentucky program that requires healthcare providers that want to open up a new facility, acquire major medical equipment, make substantial changes to a facility or project, to receive a certificate allowing them to do so. 

Several organizations in favor of keeping the program spoke at the meeting, including the Kentucky Hospital Association, the Kentucky Association of Health Care Facilities, the Kentucky Home Care Association, and two organizations representing the hospice industry. 

Among their arguments for keeping the program, they said that without certificate of need, out-of-state providers would cherry-pick services for commercial insurance patients; that the program prevents fraud and abuse in the healthcare system; and that it provides a safety net for patients unable to afford quality care. 

When it comes to out-of-state providers cherry picking patients, it refers to private equity groups coming in and refusing patients in acute care because they want to get the higher-earning commercial insurance patients. 

The patients on government assistance, which make up 70 to 80% of Kentucky patients, Galvagni said, would be left to the already struggling hospital system.

“Without certificate of need, out-of-state entities would quickly swoop in to cherry-pick the few commercially insured patients away from hospitals for the most profitable services hospitals provide,” Galvagni said. “Meanwhile, Medicare, Medicaid, and the uninsured would be left to the hospitals.”

Further, Galvagni said that according to a 2023 Kaufman Hall Report, 38% of Kentucky hospitals are already at risk of closure. Kaufman Hall, a healthcare consultant, completed the report at the request of the hospital association. 

Regarding the cherry-picking line, it’s an argument that Proctor said she doesn’t buy. 

“I don’t buy the cherry-picking line because it sounds like it is institutional protectionism instead of giving people choice,” Proctor said. “I will always be for giving people choices, so if somebody wants the choice of going to another provider, they should have that opportunity, and that shouldn’t be regulated by the state.” 

However, it’s important to note that certificate of need doesn’t just affect hospitals. 

According to Kentucky’s state health plan, certificates are issued by the Kentucky Cabinet for Health and Family Services, and there are currently 21 medical services that require certificates of need. 

In Boone, Campbell, and Kenton counties, there are 109 certificates of need, and St. Elizabeth holds nine of them. 

Regarding hospitals, they hold four of the NKY counties’ seven total certificates, with St. Elizabeth Florence, St. Elizabeth Ft. Thomas, St. Elizabeth Edgewood, and St. Elizabeth Covington.

One of the arguments favoring reforming or repealing certificate of need is that it would create a free market system, which would lower patient costs. 

Liz Fowler, CEO of Bluegrass Care Navigators, a group that provides end-of-life hospice care for patients in Kentucky, said that healthcare doesn’t work like other businesses.

She said that free-market competition in other sectors leads to efficiencies, cost reductions, and quality improvements — this doesn’t work in the healthcare industry. 

“Competition in the hospice market has not made improvements in quality or innovation,” Fowler said. “Rather, it has produced a proliferation of disreputable providers, exasperated hospice fraud and abuse, increased hospice expenditures, and created numerous program integrity concerns from the Department of Justice Office, the Inspector General, and the Center for Program Integrity.” 

Last week, Americans for Prosperity, a national libertarian-leaning conservative group known for its connections to the Koch brothers, held its first public event intending to weigh in on the certificate of need debate expected to heat up in Kentucky. 

The group said it wants to repeal the program in Kentucky, which is different from what most parties involved in the topic in Kentucky have said — most say they are open to discussing reform to better the system. 

With Kentucky’s large population of vulnerable patients, Galvagni said the Kentucky legislature will be focused on improving the system for the entire state.

“I think our legislators are gonna be concerned about maintaining access to care,” she said. “They’re not going to be swayed by an outside group that I don’t even know what their motivation is — our motivation is to keep care for the patients of Kentucky.” 

Proctor said she’s open to repeal or reform and is taking the information she learns in the interim to decide what she wants. 

“I think we’re in a unique situation, so I’m fighting for the people in Northern Kentucky to have choices and not be lumped into Cincinnati because we’re not,” Proctor said. “We’re Northern Kentucky.”