State senate bill exempts rural hospitals from CON regulations

Legislation exempting most rural hospitals from Georgia’s certificate of need law cleared the state Senate Monday, Feb. 27.

Senators voted 42-13 to no longer require proposed new acute-care hospitals in counties with populations of fewer than 50,000 residents to have to prove to the state that the medical services they plan to offer are needed in their community.

“We have an access-tohealth-care problem in rural Georgia,” said Sen. Greg Dolezal, R-Cumming, the bill’s chief sponsor. “This is a prudent step to improve access to care.”

Georgia’s CON law was first passed in 1979 to comply with a federal mandate aimed at reducing healthcare costs by avoiding duplication. About three dozen states currently have CON laws on their books.

Other states, including California and Texas, have repealed their CON laws since Congress did away with the mandate, Dolezal said.

“The original intent was to suppress the volume of health care,” he said. “As you suppress the supply of something, you decrease access.”

But Sen. Nan Orrock, DAtlanta, said the CON law protects existing hospitals from being encroached upon by new facilities that hurt them financially by taking away their patients.

“The reason CON exists is because a hospital could locate too close to another hospital,” she said. “Patients are poached.”

Indeed, when Senate Bill 99 was presented to the Senate Regulated Industries Committee in February, Dolezal said it was prompted by a private developer’s plan to build a 100-bed acute-care hospital in Butts County.

Representatives of the Wellstar Health System told committee members exempting the proposed hospital from the CON process would let the new facility open for business close to both the 25bed Sylvan Grove Hospital in Jackson and the 160-bed Wellstar Spalding Regional Hospital in Griffin.

“You will be adversely affecting a hospital that’s in place a few miles [on the other side of] of county line,” Orrock said.

But Sen. Bill Cowsert, RAthens, chairman of the Regulated Industries Committee, said the legislation requires rural hospitals exempted from the CON law to accept both

Medicare and Medicaid enrollees and dedicate at least 10% of their incomes to indigent care.

Opponents of CON reform have long argued that significantly reducing CON requirements or repealing the law entirety would lead a plethora of physician-owned ambulatory surgery centers to open near existing hospitals and — since they wouldn’t legally have to accept indigent patients — siphon off paying patients and leave existing hospitals with a heavy concentration of non-paying patients.

“Hospitals are closing down in rural Georgia,” Cowsert said. “This is to encourage new ones.”

A second CON bill that has cleared Cowsert’s committee goes farther than Senate Bill 99 in seeking to eliminate the CON law.

“Senate Bill 99 is more like a rifle shot narrowly focused on adequate medical services for rural areas of our state,” he said.

The bill now moves to the Georgia House of Representatives.