Kemp signs bill to loosen rules for opening hospitals, facilities in Georgia

Governor Brian Kemp, First Lady Marty Kemp, health care advocates, and legislators were on hand for the signing of HB 1339 (the Certificate of Need bill) in Athens on Friday, April 19, 2024.   (Nell Carroll for The Atlanta Journal-Constitution)

Credit: Nell Carroll for the AJC

Credit: Nell Carroll for the AJC

Governor Brian Kemp, First Lady Marty Kemp, health care advocates, and legislators were on hand for the signing of HB 1339 (the Certificate of Need bill) in Athens on Friday, April 19, 2024. (Nell Carroll for The Atlanta Journal-Constitution)

ATHENS — New health care facilities and services will soon be able to open in Georgia with less government regulation.

Gov. Brian Kemp signed House Bill 1339 on Friday, rolling back some of the rules governing the establishment of new hospitals in the state.

“We are proud of the progress we’ve made, but we also know we still have a lot of work to do to ensure that all Georgians have access to quality, reliable health care,” Kemp said during remarks before signing the bill. “As we continue to experience record-breaking economic growth, the need for health care in all parts of our state is only going to be increased.”

Lawmakers and hospital executives, especially in rural areas, consider the final bill to be a compromise. Some advocates had pushed to do away with state-issued certificates of need, or CON, that required new hospitals to demonstrate significant enough demand to open. Meanwhile, others wanted the process to remain completely untouched.

“If I had my way, the bill would not change the CON requirements at all,” said Chris Dorman, president and CEO of Southwell/Tift Regional Medical Center in Tifton.

Ultimately, legislators in the state House and Senate struck a deal to shorten the timeline for review of hospitals’ applications and expand the rural hospital tax credit program, giving taxpayers a credit toward their state tax bill if they donate to qualifying medical facilities.

They “listened to providers to find common ground,” said Bill Lee, CEO of Evans Memorial Hospital in Claxton.

CON rules were developed in 1974 to comply with a federal mandate requiring states to regulate new medical facilities to help control the costs of government reimbursements for Medicaid and Medicare. That mandate ended in 1986, and some states have since repealed or amended their requirements.

Negotiations between legislative chambers also prevented a full repeal of CON for free-standing outpatient care facilities. Those facilities, also known as ambulatory surgical centers, or ASCs, provide some surgical procedures to patients, but they are not required to meet the same requirements as hospitals.

And despite a last-minute attempt to pair the measure with an expansion of Medicaid, the government health care program for people with low or no incomes, the effort failed. However, the legislation does direct the state to form a study commission to explore the idea.

“Medicaid expansion would be phenomenal,” Dorman said.

Last year, the federal government asked states to determine whether every Medicaid recipient should remain eligible for the program. Those who were not recertified or did not complete the required paperwork were ordered to be dropped. The latest numbers show Georgia has removed nearly 600,000 people from its Medicaid rolls.

However, hospitals have paid the price for the uptick in uninsured patients, Lee said. In 2023, Evans Memorial spent about $2.4 million subsidizing patients without health insurance. He said the hospital projects to spend close to $4 million this year. Meanwhile, the margins are thin. Lee said his hospital earned a profit of about $1 million last year.

“It’s unsustainable,” he said.

Georgia is one of 10 states that have not accepted federal funding to expand Medicaid. Doing so would allow more people to get enrolled in a health care plan and become a paying patient.

“Even though the reimbursement rate is not optimal, it is something,” Lee said. “And something is better than nothing.”

Steve Gautney, CEO of Crisp Regional Hospital in Cordele, said that while he’s disappointed legislators didn’t pass Medicaid expansion this session, he is pleased it was discussed openly and frequently.

“Compared to where discussion has been in the past, at least it’s on the table now,” Gautney said.

The biggest clash in CON conversations hinged upon what kinds of health care facilities should be exempted from undergoing the process.

Supporters said the free-standing outpatient clinics allow Georgians to have closer access to health care, particularly obstetric and gynecological services. But hospital advocates and executives cautioned that a full-scale elimination of the CON review for those facilities would hurt hospitals.

That’s because hospitals are mandated to provide care to everyone, regardless of their ability to pay. They must also provide all clinical specialties and keep their doors open 24/7, 365 days per year.

ASCs, however, “can pick their hours, what procedures they offer and what payment plans they take,” Gautney said.

CON repeal for ASCs could have created a system where the ASCs pull away the paying patients and perform the profit-making procedures in a hospital system — such as imaging, lab work and elective surgeries — leaving hospitals on the hook for treating all uninsured patients in need of more expensive emergency services.

“Everybody wants to have a free-market society,” Gautney said. “The problem is health care is not a level playing field.”

HB 1339, sponsored by Rep. Butch Parrish of Swainsboro, will allow facilities to establish behavioral health services without having to go through a CON process in order to meet the growing demand for mental health care, which has increased, especially among young people, since the pandemic began.

Lee said behavioral health services don’t make hospitals much money and emergency rooms aren’t the best places to get long-term treatment. He said he would welcome the ability to partner with behavioral health organizations and more easily transfer patients.

Monty Veazey, president of the Georgia Alliance of Community Hospitals, said the legislation passed is a “radical change” and he hopes “CON will not be an issue for quite some time.”

“I hope they can move onto other things now,” he said, “like funding Medicaid expansion.”