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Tuesday, March 18, 2008
The real need? Healthy competition
The Atlanta Journal-Constitution
Renee Unterman’s voice is between disgust and anger. People in Gwinnett County are dying trying to get through Spaghetti Junction, she says.
“This has been going on for 10 years,” says the Republican state senator from Buford, “and this is why I am so adamantly opposed” to a “certificate of need” law in Georgia that makes her county the largest in the country without its own open heart surgery center.
“I have seen people die on the highway” trying to make their way through traffic congestion to reach either St. Joseph in Sandy Springs or Piedmont in Atlanta, she says.
Gwinnett Medical Center has applied yet again for the state’s permission to start an open heart surgery program in Lawrenceville. A decision should come within weeks.
The Georgia General Assembly, meanwhile, is deeply mired in debate about how to ease this archaic regulatory system —- prompted most immediately by an effort by Cancer Treatment Centers of America to build a facility near Atlanta’s airport to serve cancer patients who would fly in from around the Southeast.
Resolution appeared close. But the governor, lieutenant governor and House speaker are slipping into their test-of-manhood phase —- the car tax, spending, Sunday beer sales —- so all forecasts are too perishable to publish.
Whatever the immediate future on Gwinnett’s application and on certificate of need law revision, it is a relic that protects monopolies and tempts the creation of “an illegal cartel among the hospitals,” a phrase drawn from an 11th U.S. Circuit Court of Appeals decision in 1991 written by then-Chief Judge Gerald B. Tjoflat. That case involved a Federal Trade Commission objection to an effort by University Health Inc. in Augusta to acquire smaller hospitals.
“The FTC demonstrated that Georgia’s certificate of need law —- which regulates the addition of hospital services based on the need of the public —- is a substantial barrier to entry by new competitors and to expansion by existing ones …” wrote Judge Tjoflat. “Such barriers make concentrated markets more threatening since there is little chance that other firms (new or old) would be able, in the face of anti-competitive practices, to spur competition.” The CON therefore, would “facilitate an illegal cartel among the hospitals.”
But the decision that Republicans should read before they take ownership of the regulatory system they inherited —- something they can do if they’re not careful —- is a dissenting opinion by Presiding Judge Alan Blackburn of the Georgia Court of Appeals in cases arising from efforts in Cobb and Gwinnett to offer open heart surgery services.
The opinion in Hospital Authority of Gwinnett County v. State Health Planning Agency and a like dispute from Cobb was decided on Nov. 13, 1993. The majority upheld state regulators, but to free-market conservatives Blackburn’s dissent is the guide. Wrote Blackburn:
“Centralized governmental regulation of the health care industry is, to a significant degree, antithetical to our entire system of free enterprise. The notion that economic forces of supply and demand will control the quality and costs of goods and services is a concept of economic liberty that is just as basic to our system of government as the personal liberty we enjoy and so closely guard.
“A fundamental concept conflict exists between that notion of economic liberty and the notion … that more governmental regulation can increase quality of health care at lower costs. It may be that governmental regulation is part of the problem and not the cure. …”
The remainder of his opinion details the case for competition and for granting permission to both Cobb and Gwinnett to offer them.
For young conservatives interested in a career in public office, it’s worth reading, as is Judge Tjoflat’s opinion, before buying in to a regulatory system that Ronald Reagan recognized as a failure more than 20 years ago.
It’s a regulatory system that makes lawyers rich and puts the General Assembly in the position of resolving conflicts that belong in the marketplace.
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