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Health care costs fuel debate over regulation

Jim Witmer Kettering Medical Center upgraded its neonatal intensive care unit.

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Jim Witmer Soin Medical Center in Beavercreek begins accepting emergency department patients on Feb. 22.

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Submitted Kettering Medical Center on Jan. 1 upgraded neonatal intensive care unit to care for sicker babies.

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Jim Witmer Miami Valley Hospital South has two large expansions under way, one of which opens in March.

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By Ben Sutherly, Staff Writer Updated 2:41 AM Sunday, February 12, 2012

The pricey battle for market share that has spurred a hospital building boom along the Interstate 675 corridor is being waged with no outside public review of the need.

Ohio and 22 other states scrapped their need-based rules for hospitals as part of a national trend toward deregulation from the late 1980s through the late 1990s, leaving the region’s two dominant health care networks to fight toe to toe without a “certificate of need” process.

Both Premier Health Partners and Kettering Health Network have said the new construction is a response to the region’s shifting and aging population.

But the competition has come at no small cost, and some even argue that quality of care in some cases has been compromised.

Premier and KHN alone will spend an estimated $1.2 billion on capital improvements between 2011 and 2015, much of it for new and expanded hospitals, but also for noncompetitive investments such as electronic medical records that hospital officials say will save money.

But some critics say more isn’t always better.

“I’m seeing a flea market — or wild, wild West — of health care services instead of a coordination of health care,” said Cathy Levine, executive director of the Universal Health Care Action Network of Ohio, who believes a certificate of need program is part of the solution.

“Build a hospital, all of a sudden you have more people who need surgery. That’s one of the things that is driving up our health care costs.”

Hospital officials have said the number of beds in the area has remained relatively flat.

Montgomery, Greene and Miami counties had 2,650 hospital beds in 2010, up slightly from 2005 but down from 3,294 beds in 2000, according to the Greater Dayton Area Hospital Association. However, hospital stays are shorter and more procedures are done in outpatient settings, reducing the overall need for beds.

A majority of states have certificate of need programs. In a limited sense Ohio does, too. It is one of 37 states that have such programs for some facet of health care, either for hospitals or other health care facilities or equipment. But Ohio’s program covers only nursing homes, which made it the least restrictive of those 37 states in 2010, according to the American Health Planning Association, a supporter of certificate of need programs.

By comparison, Vermont regulates 30 kinds of services and medical equipment.

Need-based hospital regulations are meant to coordinate planning of new services and construction and give a voice to those who pay at least indirectly for new and expanded facilities — employers, patients and taxpayer-funded programs like Medicare and Medicaid.

But Bryan Bucklew of the Greater Dayton Area Hospital Association said a certificate of need program would be no cure-all for rising health care costs.

“I think it is a huge mistake to think that having a certificate of need program is automatically going to reduce costs, reduce perceived duplication of services, and increase quality,” Bucklew said. “There are way too many moving parts in the health care system.”

Clash over regulations

Certificates of need have long been a political hot potato, as free market enthusiasts clash with consumer and public health advocates seeking more input on health care decisions. One state health official likened the issue’s divisiveness to abortion.

Gov. John Kasich’s Office of Health Transformation last week declined comment on the merits and drawbacks of a certificate of need program. So did the state Department of Health, which administers Ohio’s program.

“It’s really just a sensitive topic right now,” said John Palmer, spokesman for the Ohio Hospital Association, the dominant industry group representing hospitals. “It’s not appropriate for us to talk about something when it’s not already in existence.”

Miranda Motter of the Ohio Association of Health Plans, which represents commercial health insurers, also had no comment.

The controversy isn’t new. In the mid-1960s, New York became the first state to require hospitals and nursing homes to demonstrate need before getting approval to build facilities or expand services

A decade later, Congress expanded the requirement to all 50 states in an attempt to rein in Medicare costs. Part of the thinking behind the federal mandate: supply often generates its own demand when a third party — such as taxpayers or employers — foots the bill.

By 1975, Ohio’s certificate of need program was in place for hospitals and nursing homes. It allowed the public to testify on big health care projects, though critics often called the process ineffective. Congress ended the federal mandate in 1986, and Ohio followed suit in 1995, keeping the need requirement in place only for nursing home beds.

In the decade after deregulation, the number of hospitals in Ohio declined by seven, while the number of diagnostic imaging and ambulatory surgery centers soared by 492 and 220, respectively, the state Department of Health said.

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