Georgia high court upholds law governing health care facilities

In a win for politically powerful hospital interests, the Georgia Supreme Court upheld the state’s “certificate of need” law in an opinion issued Monday that said a surgical center could not expand without state approval.

Two doctors who own the Georgia Advanced Surgery Center for Women in Cartersville had challenged the state law that governs health care facilities. Dr. Hugo D. Ribot Jr. and Dr. Malcolm Barfield argued that they did not need state approval to add a second operating room to their outpatient surgery center.

The debate over the certificate of need, or CON, has raged for more than a decade at the Capitol between hospital groups, such as the Georgia Hospital Association and the Georgia Alliance of Community Hospitals, and Newnan’s Cancer Treatment Centers of America, which has long sought the right to expand its reach.

Both sides have spent vast amounts of money trying to influence state lawmakers, who have regularly considered CON legislation.

The state’s 1979 law limits competition in the health care marketplace, with the idea that the public will be better served if health care providers do not duplicate expensive services. That means that before hospitals or other health care facilities can be constructed or expanded, the state has to determine that there is an actual need for the service. In theory, if expensive health care facilities are fully used, the overall cost of health care would decline.

Proponents of the free market, however, say the opposite is true and that CON laws stifle competition and drive up costs.

The doctors argued that the law violates a clause of the Georgia Constitution by blocking the surgery center’s ability to compete in the health care marketplace. That clause says the state can’t authorize a contract that encourages a monopoly.

In its opinion, written by Presiding Justice Harold D. Melton, the court said the doctors’ argument does not properly interpret the clause.

The CON law “does not authorize monopolistic ‘contracts’ relating to providers of new institutional health services,” the opinion says. “It only requires that all such providers obtain a certificate of need before adding new services.”

The opinion noted that health care is unlike other businesses in that it is an industry that is heavily regulated by both the state and federal government.

“Nothing in today’s opinion should be understood to support sweeping economic regulation of this sort beyond this unique context,” the court said in a footnote.

Attorneys from the Phoenix-based conservative and libertarian Goldwater Institute called the state’s CON law anti-competitive and outdated.

“This decision put profits over patient care. Georgia hospitals can still use the certificate of need bureaucracy to veto new options for care,” said Jim Manley, one of the Goldwater Institute attorneys who filed the case. “Bureaucrats will continue to restrict access to quality care.”

That view is not shared by many Georgia hospital advocates.

“Georgia’s certificate of need laws play a critical role in ensuring access to quality care, including emergency services, for all Georgians by providing for a statewide distribution of hospitals and other medical facilities,” said Monty Veazey, the president and CEO of the Georgia Alliance of Community Hospitals.

Earl Rogers, the president and CEO of the Georgia Hospital Association, said CON “ensures a level playing field between hospitals and other specialty providers that are not subject to the same regulatory and financial burdens and discourages unfair competition from facilities that serve few, if any, Medicaid and uninsured patients.”

While Georgia typically has made hospitals go through the CON process, in 2008 the General Assembly allowed Cancer Treatment Centers to open its facility without doing so because it was touted as a “destination hospital” that would draw patients to Georgia. As such, lawmakers limited it to 50 beds and required that at least 65 percent of its patients come from outside the state.

Cancer Treatment Centers pushed legislation to make changes, and when it was unsuccessfulit petitioned the state in 2015 to change its rules so that the company could seek approval to become a general acute hospital that would not have to turn away Georgia patients.

Angry state lawmakers and hospital lobbies who opposed the change considered it an end run around the General Assembly, and the Georgia Department of Community Health eventually tabled the potential change.

Bills to end CON are often filed by lawmakers, and both sides in the fight have spent a lot of money to influence the outcome.

Cancer Treatment Center executives helped organize a fundraiser for Gov. Nathan Deal in Newnan in the fall of 2014 when he was running for re-election. Deal collected $12,500 from company executives after attending a ribbon-cutting at its Southeastern Regional Medical Center.

Since its push to enter Georgia began in the mid-2000, Cancer Treatment Centers and its employees have contributed $400,000 to state party political action committees and the campaigns of lawmakers and other state leaders.

They have been outdone by their opponents, the Georgia Hospital Association and the Georgia Alliance of Community Hospitals, who have contributed more than $2.3 million to state lawmakers, candidates, state leaders and party political action committees over the past 12 years, according to campaign disclosure reports.

The Alliance of Community Hospitals has contributed more than $200,000 just since Cancer Treatment Centers tried to change the CON rules in mid-2015, including, recently, $6,600 to the gubernatorial campaign of Lt. Gov. Casey Cagle, the front-runner in the race, and $5,000 to Senate President Pro Tem David Shafer’s campaign for lieutenant governor.

The Georgia Hospital Association contributed $2,500 to Cagle’s gubernatorial campaign as well.

Both sides also spend a bundle every year wining and dining lawmakers during legislative sessions or paying for them to attend their summer conferences. Records show that so far this year, lobbyists for Cancer Treatment Centers, the Georgia Hospital Association and the Alliance of Community Hospitals have, combined, spent about $18,000 on members of the General Assembly.

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