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Civitas goes awry while giving health policy a try

The folks at Civitas are good at what they do, which is mostly political hackery and buying push polls from New Jersey. It’s when they wade out into the rough waters of policy that things get a bit dicey. Despite the dangers, Civitas has decided to leap into the issue of Certificate of Need by bumbling through a five part series on the complex topic.

What is Certificate of Need? Generally when you want to build new health care facilities or purchase expensive medical equipment in North Carolina you need to first get permission from the state. The idea is that an unrestrained proliferation of hospital beds and fancy imaging devices will lead to more expensive, inefficient care without providing better outcomes. Certificate of Need also helps maintain access to health services in rural parts of the state. As has happened many times, hospitals want to get out of poor regions where the populace is underinsured and move to wealthier environs. The Certificate of Need process either makes the hospital stay put, or it seeks some compromise. A hospital may only get permission, for example, to move a bit closer to a wealthy area while leaving some critical facilities in the underserved area.

Civitas predictably tells us we should scrap all of this. The justifications for CON laws are flawed and these regulations actually hurt access.

One of the theoretical underpinnings for CON is “Roemer’s Law”, which Civitas tells us is untrue. Let’s set aside for a moment that Roemer’s first name was Milton, not Mitch. Roemer’s idea was that the supply of medical facilities and technology can stimulate its own demand. Where there is an overabundance of intensive care rooms and imaging devices people tend to spend more time in the hospital getting more tests. The short hand description of Roemer’s Law is that a “built bed is a filled bed”.

Statisticians and health policy analysts have spent decades trying to prove or disprove Roemer’s basic premise. But it turns out that a summer fellow at Civitas can debunk Roemer in a few sentences! Just think of all the wasted careers.

If a built bed were a filled bed, says the seasonal Civitas employee, then hospitals would operate at 100 percent occupancy all of the time. As most people would recognize, the shorthand description of Roemer’s Law is not meant to be taken literally. Roemer did not think that all built hospital beds are occupied by a warm body at all times. If that were the claim then someone could just wander around the hospital until they found an empty bed and say, “Aha! I have found an unoccupied bed. That Roemer was wrong all along.”

Instead, the idea is that supply can stimulate demand. Part of the reason is the third party payment system (good job Civitas). But, as Nobel economist Kenneth Arrow noted on many occasions, health care is not a typical commodity. So the reasons that supply stimulates demand are subtle and complicated. Most health care spending comes at the end of life when people are having multiple system failures. These patients tend to get shuffled around to various specialists and undergo test after test. With the stress and confusion it’s not really the best time for shopping around to find the best price on an MRI. Even if someone is not shielded by an insurer, people will pay any price and go into debt if a doctor says the tests are necessary to extend the life of a loved one.

But we do know after much empirical research by the analysts at Dartmouth that where there are more intensive care beds and more imaging devices people tend to see more doctors and have more procedures done with no better outcomes. These patients also tend to be less satisfied with their care.

But, Civitas says in the first part of its series, CON denies access. Again, I will set aside the fact that CON has preserved access to health facilities many times in North Carolina as hospitals attempted to flee rural areas. The American Medical Association, we are told, found that people in states without CON laws were slightly more likely than patients in states with CON laws to receive revascularization after a heart attack. That sounds serious. Who could support a policy that must be literally killing people?

I won’t ask that someone at Civitas read an entire academic paper. But just look at the “Conclusions” and scroll down to the last sentence. Too much to ask? Ok, I’ll quote it here:

However, differences in the availability and use of revascularization therapies were not associated with mortality.

I see. So in states without CON laws you are more likely to get sliced open without any better outcomes than in states with CON laws. And this is an argument against CON?

Civitas follows the arguments of frustrated doctors by claiming that hospitals tend to win competitive CON battles. The reason may be partly political. But hospitals also tend to be open all day, every day. And hospitals treat a large number of indigent patients. Placing imaging technology in a hospital makes it more available to more people at more times than sticking an MRI machine in a boutique clinic that sees few poor patients and is open only during weekdays.

Although it’s a little painful watching Civitas do policy, I don’t disagree with some of their less radical calls for reforming the CON system. I don’t have any particular stake in maintaining the existing process. But abolishing CON or easing the restrictions on building medical facilities will lead to less access in underserved areas and more inefficient care.

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