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Judge Upholds Georgia Certificate of Need Law

October 1, 2016

Atlanta—Today a Georgia trial judge upheld the state’s anti-competitive “Certificate of Need” laws that allow existing hospitals to veto new hospitals from opening, expanding their operations, or buying new equipment like MRI and CT machines. Attorneys with the Goldwater Institute sued on behalf of two doctors who want to expand their outpatient surgery practice.

The “Certificate of Need” laws require doctors to apply to the Georgia Department of Community Health for permission before they can add space to serve more patients or buy certain new medical equipment. But the Department allows health care providers who don’t want more competition to object to new applications, regardless of whether the applicant is qualified. Thirty-six states and the District of Columbia have similar Certificate of Need laws in place.

“This decision put profits over patient care. Georgia hospitals can still use the certificate of need bureaucracy to veto new options for care,” said Jim Manley, a Goldwater Institute attorney who filed the case. “Bureaucrats will continue to restrict access to quality care.”

Institute lawyers argued that the laws violated a provision of the Georgia Constitution that forbids the state from imposing monopolies. In 1979, the Georgia Supreme Court struck down a certificate of need rule for car dealerships under that clause, declaring that it “restrict[ed] competition and create[d] a monopoly” without protecting consumers.

The Goldwater Institute represents Hugo Ribot and Malcolm Barfield, OB-GYN surgeons who own a surgery center, the Georgia Advanced Surgery Center for Women, in Cartersville, Georgia. Dr. Ribot and Dr. Barfield want to serve more patients by adding a second operating room and letting other surgeons use their facility on the days when they are busy delivering babies. When one of the doctors doesn’t have a surgery scheduled, the state-of-the-art facility goes unused. Allowing other surgeons to use the surgery center would help cover the facility’s overhead costs and give more doctors and patients access to a surgery center close to home.

But the Georgia Department of Community Health turned down their application for a certificate of need, saying that because the center isn’t already used every day, there’s no need to allow other doctors to use the facility or add another operating room. This decision ignored the fact that the center cannot be used every day because the doctors are sometimes away from the center to deliver babies.

Certificate of Need laws were supported by the federal government in the 1970s as a way to reduce healthcare costs; but evidence demonstrated the laws did the opposite: they restricted access to care and raised costs. The federal government repealed its Certificate of Need requirement in 1986. The Department of Justice and Federal Trade Commission released a statementencouraging all states to repeal their certificate of need laws, calling them a “detriment” to patients.  

The total negative impact of the Certificate of Need law on health care in Georgia is well documented. Dr. Thomas Stratmann of the Mercatus Center at George Mason University presented evidenceto the court that Georgia’s CON laws increase health care costs, reduce access to care in both rural and urban areas, and reduce quality of care.

“In states that have done away with certificate of need laws, we see greater access to lower cost, higher quality care,” said Manley. “Georgia deserves better and we will continue to fight for health care freedom.”

The Goldwater Institute will appeal the case to the Georgia Court of Appeals.

Read more about the case, Women’s Surgical Center v. Reese, here.

 

 

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