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Health care: Local members of state panel mirror debate over regulations

By Jason Lesley
Coastal Observer

Two sides of the debate over the state’s revived medical Certificate of Need process are playing out within a mile of each other on Highway 17 near Murrells Inlet.

Doctors from Carolina Orthopaedic Specialists expect to open a new surgery center on the east side of the highway near the Georgetown-Horry county line next month. It will provide the kind of specialty surgery that pulls patients from Waccamaw Community Hospital less than a mile south on the western side of the highway.

Dr. Michael Bohan of Carolina Orthopaedic Specialists says he’s a total free market person and favors eliminating the Certificate of Need. “What other business says you can’t build a Burger King across the street from a McDonald’s?” Bohan asks. “Obviously health-care is a little different. They have to be licensed and inspected. Nobody is saying no licensing and regulations. Should you be able to say to somebody, no, you don’t have the right to build a facility?”

Gayle Resetar, chief operating officer of Waccamaw Community Hospital, says if unregulated competitors are allowed to nibble away the profitable services, community hospitals will be left with the unprofitable and the uninsured. It’s a sure road to financial failure for hospitals operating on a thin profit margin.

Resetar said community hospitals can’t turn away patients like a specialty surgery center. “We believe we are safety nets in many ways,” she said. “We have patients who use the ER as their primary care clinic. It would be very detrimental to community hospitals that are providing all that care at a 1 percent or less profit margin to have a for-profit competitor in a non-CON world pulling off niche profitable services that are the services that subsidize our ER. It all works because it’s one big entity.”

Though they come at the process from different directions, Bohan and Resetar are both members of the State Health Planning Committee — she is the chairwoman — and will meet soon to begin sorting out the state’s Certificate of Need process. Gov. Nikki Haley attempted to kill the program through a budget veto last year, and the S.C. Department of Health and Environmental Control shut down the process. Before the S.C. Supreme Court ruled Haley’s actions illegal, some entities began projects without Certificates of Need. The resulting chaos has set the stage for another attempt to overhaul the program.

Bohan said he got involved in the Certificate of Need process when his group began planning to build a surgery facility three years ago. “As you know,” he said, “it’s a long and arduous process. We spent a year getting a CON, and the hospital fought us for that. I ran into a lot of people involved in the process, and people in the governor’s office asked me to serve on the State Health Planning Committee to come up with the state health plan to review the CON process.”

Bohan and Resetar agree that the job of their committee is to see that counties, rich and poor, are getting adequate medical services. There is more competition to serve the state’s populous areas, Bohan said. “It’s the job of this committee to look at that whole process,” he said.

A complication of having the Certificate of Need process unfunded and suspended for a year is a looming glut of applications from health providers and institutions that started operations without a certificate. Lexington Medical Center near Columbia opened a second open heart surgery unit and a third catheterization unit while the program was in limbo and has been ordered to close them until it gets a certificate. Dozens of home health agencies sprang up across the state without certificates too. They will need them to get their licenses renewed. “These people are not going to be grandfathered,” Bohan said. “That’s a legislative decision. There’s some sorting out to do. There are counties under-served by home health agencies.”

While the health committee will make a recommendation about home health providers, Bohan would like to see them sink or swim on their own merits. “If they provide good services at a reasonable cost and serve their patients well,” he said, “who’s to make a decision that they can’t? Some big home health agencies see their turf being infringed on. The harder they can make it, the more they shrink the competition. It’s all about profit.”

Resetar said public hearings will begin next month that will guide the development of the state health plan. The committee will review the public comments and incorporate some of the public’s ideas.

While the suspension of the Certificate of Need program is causing concern about a flood of already licensed applicants seeking certification, it served to point out a flaw in the state’s old health plan, Resetar said.

“The methodology to define need for a certain service — radiation therapy, hospital beds or home health agencies — is what the state plan is,” she said. “It’s a way to articulate: Here are the needed services in our state. The methodology that existed prior to the governor’s hiatus only created an opportunity for two home health agencies in the whole state. There were hundreds that got licenses. Because there were so many new home health agencies opened, the utilization of home health went up, which is a really good thing because it’s a great way for care to be provided. It’s better than being in the hospital if you are borderline sick and if it’s safe. Home health utilization across the country has gone up. That’s a good thing.”

The State Health Planning Committee’s most pressing job is determining a way to measure the need for home health providers in the state. “Now we know something that we didn’t know before,” Resetar said. “During that hiatus, the utilization went up. What that tells me is that there’s a flaw in the planning methodology for the need in home health.”

There is room for streamlining the Certificate of Need process, Resetar said, without eliminating it, as the governor wanted. Proposed legislation runs the gamut of allowing hospitals to replace equipment and add beds without a certificate to doing away with the State Health Planning Committee altogether. “There are some who feel it’s a political process because we are appointed by the governor,” Resetar said. “We haven’t been able to get consensus in the state. I think we would all agree some modification is in order.”

She said the requirement of a Certificate of Need to replace equipment valued at $600,000 or more or capital improvements of $2 million or more is obsolete. “For a hospital to have to go and get a CON to replace a CAT scanner doesn’t make sense,” Resetar said. “I think Gov. Haley would say the same thing. There is a lot of time, resources and people involved in that CAT scan review. I don’t have any doubt that the state’s going to approve it because we have an ER and we need a CAT scanner, but because that’s what the law says — $600,000 — I have to get a CON and go through the process. Looking at my CAT scan replacement is not the best use of their time, but they have to because that’s what the regulation says. I think we would all agree some modification is in order.”

Resetar said there are only three employees processing Certificates of Need in the state office. It has taken them a year to catch up the backlog. “They are about to get a whole bunch of new applications from home health agencies as soon as the new plan is adopted,” she said.

Resetar said she agrees with the South Carolina Hospital Association’s stance that the state needs to retain Certificates of Need for major services. “On one hand,” she said, “you are trying to be careful that you don’t negatively impact in a critical way existing providers. I still think it’s the right thing for this state.”

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