The debate over medical certificate of need continued in Frankfort on Thursday at a meeting of the legislature’s interim joint committee on licensing, occupations and administration regulations.
The committee is co-chaired by Kentucky Sen. John Schickel (R-Union), and the meeting heard testimonies from Rep. Marianne Proctor (R-Union) and others on a topic particularly germane to the healthcare landscape in Northern Kentucky.
“This is a constituent driven issue,” Proctor said. “People in my district are clamoring for choices in their health care [and] hospitals.”
Kentucky’s medical certificate of need laws require that healthcare institutions providing certain services must first prove a communal need for such services before establishing facilities in an area.
Certificates are issued by the Kentucky Cabinet for Health and Family Services, and there are currently 21 medical services that require a certificate of need, according to Kentucky’s state health plan. These services include ambulatory surgery centers, residential psychiatric facilities and nursing homes, among others.
An established provider can challenge the cabinet’s granting of a certificate of need to a new facility that provides one of the flagged services by appealing to the courts.
Proponents of the policy argue it’s necessary to prevent the incursion of boutique healthcare providers into rural communities and communities with lower incomes, making it impossible for patients who rely on Medicare and Medicaid, which tends not to reimburse hospitals on a one-to-one basis and which only certain providers accept, from finding care.
Critics of certificate of need, on the other hand, argue that the policy enables large hospital systems to establish monopoly power over a region, granting them the ability to inflate prices and get away with declining care quality in the absence of competition.
Certificate of need laws first appeared in New York in the 1960s. The laws gained favor at the federal level in 1974 under the Nixon Administration with the passage of the National Health Planning and Resources Development Act, which saw an influx of federal funding into state healthcare systems.
Over time, the federal government began retracting its funding, and the laws gradually lost favor at the national level. Many states began discarding their certificate of need laws as a result: Today, Ohio and Indiana, for example, only require certificate of need for the establishment of elder care facilities.
Although it wasn’t mentioned in Thursday’s meeting, St. Elizabeth Healthcare has been the focus of much certificate of need debate in Northern Kentucky due to its outsized market share in the local healthcare sector.
Proctor has been one of certificate of need’s most strident critics and has toured cities in the region asking for support in either reforming or revoking the policy. Many of the residents who have spoken out against certificate of need at public meetings along with Proctor describe horror stories of poor treatment at the hands of St. Elizabeth–LINK nky has not investigated the veracity of their individual claims.
Notably, St. Elizabeth blocked the establishment of a Christ Hospital ambulatory surgery center in 2018 using the certificate of need process. Christ Hospital had been granted a certificate of need in 2017, but St. Elizabeth successfully appealed the decision, arguing that the center would drive out lower-income patients in favor of patients with commercial insurance plans and enough income to self-pay.
Erlanger became the site of the debate early last year after Proctor visited the city council asking for them to support a resolution calling for reform. That debate ended in a 6 to 3 vote from the council in favor of reform.
Additionally, Proctor’s visit to Covington in September of last year culminated in an exchange with the city commission and Mark Guilfoyle, an attorney working for St. Elizabeth, in which Covington Mayor Joe Meyer asked point blank if St. Elizabeth would use certificate of need laws to block the establishment of a medical center at the Central Riverfront Development site. Guilfoyle said that if an ambulatory surgery center, like the one Christ Hospital tried to establish in 2017, or something that “hurts us as a safety-net hospital” were to come to Covington, they would oppose it.
Proctor has tried (and failed) to pass legislation changing certificate of need laws in the commonwealth throughout her time in office. Last year, a special legislative task force spent about six months assessing the policy before concluding the issue needed additional study. Proctor and Schickel both sat on the task force.
Thursday’s meeting saw speakers make cases for and against certificate of need.
The first was Kentucky Sen. Stephen Meredith (R-Leitchfield), who formerly worked as the CEO of a hospital in rural Kentucky. Meredith reiterated many of the arguments in favor of certificate of need.
Specifically, he argued that the policy enables rural communities (or any community with a meager healthcare infrastructure, for that matter) to continue providing for patients who couldn’t afford commercial insurance. St. Elizabeth has made a similar argument about itself, saying that it accepts any patient, even if they loose money on providing the service.
He also spoke about broader trends in healthcare, such as the corporate consolidation of hospitals, shortages of primary care providers and the overall increasing cost of care.
After Meredith’s statements, Schickel voiced some of his constituents’ concerns about healthcare options in the region and asked Meredith to respond.
“What do you tell someone in my part of the state–an urban area, Northern Kentucky–that looks to Louisville and Lexington and all the other urban areas of the state and sees where there’s multiple hospitals with choice to go to the hospital, and up in that area, they don’t see any choice in the state because of certificate need?” Schickel asked.
Meredith said it would depend on what one defined as a service area. Some regions, he said, simply didn’t have any choice when it came to hospitals. This dovetailed with this argument that rural communities especially would be hurt with the abolition of certificate of need.
“For Northern Kentucky, you have access to health care. Many of our communities do not,” Meredith said. “It may not be the access that you want, but you have access to health care.”
Proctor also spoke at the meeting, opposing certificate of need. She was joined by Jaimie Cavanaugh, an attorney with Pacific Legal Foundation, a law firm with libertarian leanings, who argued that academic literature on the policy did not support the effectiveness of certificate of need when it came both cost and quality of care.
“When we grant these hospitals monopoly power, they are able to inflate their prices, and that’s, on average, about 12%,” Cavanaugh said, based on her analysis.
She added that a full repeal of certificate of need might not be warranted, but “we all want to increase access for our constituents,” she said.
No final decisions on the policy were made at the meeting, but the issue is likely to come up again in the future.
You can view the materials presented at the meeting, as well as a full live-stream of the meeting, including the complete statements of Proctor, Schickel, Cavanaugh, Meredith and others who spoke at the meeting at the links below: