Get Rid of State Rules That Mismatch Patients, Services Outmoded regulations block hospitals, other

1
Get Rid of State Rules That Mismatch Patients,
ServicesOutmoded regulations block hospitals,
other medical services from moving to the growing
suburbs

• The Detroit News
• Editorial, March 1, 2004

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Rules about Certificate of Need

• Novi, one of the fastest-growing cities in Metro
  Detroit, still doesnt have a full-service
  hospital. And an Indian tribe is trying to go
  around state government and set up a
  body-scanning treatment center in Macomb Countys
  Clinton Township.
• Both situations are the result of outmoded state
  rules that try to control where hospitals and
  clinics can locate. The result is a mismatch
  between the states population and the
  availability of medical services.

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• The regulations were set up in the 1970s to avoid
  costly duplication in the health care industry.
  They force hospitals and other health care
  providers to obtain permission from a state board
  before they can expand or build new facilities.
• But medical costs have still grown rapidly, and
  hospitals or clinics that want to set up shop in
  growing communities are bogged down in a costly
  tangle of red tape.
• For example, Henry Ford Hospital and St. John
  Hospitals, faced with declining use of their
  space in Detroit, tried for 12 years to get
  permission to open satellite operations in Novi
  and West Bloomfield, where many of their patients
  had moved. They didnt succeed.
• Finally, they prevailed on state lawmakers to
  give them a special exemption. The hospital
  systems still havent been able to move forward
  with their plans because suburban hospitals that
  dont want to face competition have sued to block
  them.

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• The Hannaville Indian Community, an Upper
  Peninsula tribe has picked a site in Clinton
  township and wants the federal government to
  declare this site tribal land so it wont have to
  obtain state approval to build the center. In our
  view, this is silly and an abuse of the concept
  of tribal land. But the tribe has made the
  calculation that the area could use an imaging
  center. (Imaging is used to detect certain kinds
  of illness.)
• The tribe may be right. The two closest imaging
  centers to the one proposed in Clinton Township
  are located in Sterling Heights and Roseville.
  They collectively perform about 21,000 scans a
  year a lot by any reasonable measure.
• If some hospital or medical practice wants to
  offer a scanning service in this part of Macomb
  County and thinks it can be done without a
  financial loss, why should state rules bar it
  from doing so?
• It shouldnt take hospitals 12 years to get
  permission to move some operations from one city
  to another. And lawmakers ought to draw a lesson
  from this kind of desperate maneuvering Scrap
  the rules that get in the way of matching
  patients with medical services.

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The Economics

• We talked about distance, hospital size, and
  monopoly power.
• I downloaded two hearing transcripts that you
  might want to look at
• May 28, 2003 Hearing
• June 10, 2003 Hearing
• Explains how these rules are made.
• For example, search on Novi