RICHMOND — A panel of hospital CEOs, doctors and health-care executives on Tuesday considered changes to Virginia laws regulating medical facilities and services that two federal agencies said curb competition and stifle innovation in the state’s health-care industry.
Virginia’s certificate-of-public-need law, which requires the state health commissioner’s pre-approval for hospital expansions, surgery centers and certain medical services, will likely be at the center of a partisan showdown in the upcoming legislative session. The fight could pit powerful hospitals and their advocates against legislators who say the law slows free-market enterprise in an industry that needs it.
A work group appointed by Virginia Health Secretary William A. Hazel Jr. and chaired by Eva Hardy, a former Dominion Virginia Power executive, has until Dec. 1 to recommend that the legislature repeal the regulations, leave them as is or change them.
Many Republicans in the General Assembly favor rolling back or eliminating the regulations entirely, saying the costly and time-consuming approval process can discourage health-care providers from expanding services in Virginia. The Federal Trade Commission and the antitrust division of the U.S. Justice Department on Monday issued a 13-page statement panning the laws for limiting consumer choice, among other criticisms.
But supporters of the current process say the regulations offset charity care costs, protect consumers and guard against redundancy in services.
John F. Duval, chief executive officer at Virginia Commonwealth University Health System in Richmond, urged the panel not to fall for free-market rhetoric.
“The precipitous deregulation of the system” is risky, he said, because newcomers can cherry-pick profitable services while leaving teaching hospitals and others to care for patients who cannot afford to pay.
Yet Charlotte Tyson, chief executive of LewisGale Hospital in Salem, Va., said her hospital has been denied a certificate of public need for a “much-needed” neonatal intensive-care unit because the service exists 30 minutes away.
“This precious time can literally mean life or death,” she said.
Virginia is one of more than 30 states with similar laws on the books, according to the National Conference of State Legislatures.
On Tuesday, the work group discussed draft recommendations to streamline the process for submission and review of applications, increase public transparency, and exempt some facilities and services, such as mental health, medical equipment and imaging. Officials made no final decisions and will meet again next month.
Gov. Terry McAuliffe (D) and the Virginia Chamber of Commerce declined to take a position on the issue before the work group issues its findings.
Opponents argue that the pre-approval required by the 42-year-old law can be time-consuming and costly, with fees of up to $20,000.
Del. Kathy J. Byron (R-Lynchburg), who requested the federal review and has pushed for major changes to the law, said: “Competition creates an opportunity for innovation. When you have a free market, competition drives down cost.”
But the Virginia Hospital & Healthcare Association, which favors the certificate-of-public-need laws, said rather than a free-market enterprise, health care is one of the nation’s most regulated industries.
“Congress requires most hospitals to treat emergency room patients regardless of their ability to pay,” VHHA spokesman Julian Walker said in a statement. The certificate-of-public-need system helps “offset costs hospitals incur from caring for uninsured patients and shortfalls from reimbursements which fail to cover hospitals’ costs for treating those in government health-care programs for the elderly and indigent.”
Del. John M. O’Bannon III (R-Henrico), a neurologist, said charity care requirements would probably be written into any reform legislation that the General Assembly takes up next year.
It’s unclear whether McAuliffe, who went to the mat with the Republican House over Medicaid expansion, would veto attempts to roll back the regulations.