NCPA - National Center for Policy Analysis

Restricted Growth of Home Health Agencies Hurts Patients

February 28, 2013

In 16 states and the District of Columbia home health agencies that send skilled medical professionals directly to patients must get permission from the government. The regulations distort the free market, which lowers competition and the quality of care, says John Ross of Reason Magazine.

  • In the District of Columbia, the district's State Health Planning and Development Agency (SHPDA) has rejected 46 of the 49 home health applications submitted.
  • Home health agencies must obtain a Certificate of Need (CON) before they can begin operation.
  • The SHPDA has already determined that the city's 27 existing providers are satisfying all the demand, which restricts newer agencies from creating competition by offering higher quality services.

The CON requirement is a remnant of a 1980 federal law that required states to create health planning agencies with veto power over the provision of new medical services. The law, which was designed to restrain health care spending, was eliminated in 1987 and 14 states have since dismantled their CON regimes entirely.

  • Washington, D.C.'s CON agency requires applicants to submit a 74-step application, along with a $5,000 to $300,000 fee, which allows SHPDA to determine if a new venture is financially viable or in the public's best interest.
  • The CON system also allows businesses that already hold a CON to object to applications or sue to tie up new entrants in litigation.

Even when need is clearly established by the community in support of applicants, SHPDA has denied the application on the basis that the demand was not quantified and that only it knows what the true demand is.

  • Almost 50 businesses in the last five years have been kept from operating within the District of Columbia in the name of protecting patient health and safety.
  • Instead of allowing the agency to continue operating, and to rewrite its CON requirements in secret, it should be scrapped to provide more health care options.

Legislators in Maine, Washington, Mississippi and Tennessee, among others, are reviewing the CON requirements and considering eliminating the mandates.

Source: John Ross, "How D.C. -- and 16 Other States -- Hurt Patients in the Name of Protecting Them," Reason Magazine, February 14, 2013.


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