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Bill gives direction to certificate-of-need debate

ATLANTA - Long before the General Assembly convened last month, it was clear that whether and how to change the state law governing hospitals would be heavily lobbied and hotly debated.

But six weeks into the 2007 session, the issue was muddled. The flurry of bills that had emerged ran the gamut, from making some process adjustments in Georgia's certificate-of-need law to an outright repeal.

Then, Gov. Sonny Perdue stepped in. The comprehensive legislation introduced in the House last week on the governor's behalf was the ninth CON bill tossed into the hopper since the session began.

But both lawmakers and lobbyists representing doctors and hospitals - the two interest groups pitted against each other in the CON debate - quickly concluded that Perdue's measure would become the moving train, for better or worse.

"The governor has a great opportunity to pursue his goals in this,'' said Rep. Tom Rice, R-Norcross, chief sponsor of one of the bills that preceded Perdue's. "It's been put out there in an attempt to get to a conclusion that all sides can agree on.''

History of CON

Georgia's CON law has been around since 1979. It requires hospitals and others wishing to build new health care facilities or offer additional medical services to demonstrate to the state that there's a need for their project.

By and large, hospital administrators like the process because it reduces competition. Beyond financial self-interest, they say it also keeps down the costs of health care to patients and insurers by avoiding duplication of services.

Doctors who wish to strike out on their own, however, have long complained that the CON approval process is overly cumbersome and, indeed, a weapon the state uses against them.

There is some relief for doctors with single specialties. An exemption in the CON law allows them to open freestanding outpatient surgical centers.

But Georgia does not consider general surgery to be a single specialty. As a result, general surgeons are a driving force behind this year's campaign to change the law.

Dr. Chris Smith of Albany, president of the Georgia Society of General Surgeons, said he spent $230,000 in legal fees during the 1990s trying to get a CON for his business, Albany Surgical Center, only to be denied because it wasn't considered a single-specialty practice.

"We want no special treatment, just the rights of other recognized specialists in Georgia,'' Smith told members of a House committee last week.

Economic issue

Key business leaders in Southwest Georgia are on Smith's side on the issue.

A coalition of three major Albany-area manufacturers released a survey two years ago showing that they spend an average of $1,400 more per employee on health coverage than at their other plants around the country.

Vince Falcione, a spokesman for The P&G Paper Products Co., blamed the CON law for driving up those costs by restricting the supply of health care in the region.

"When I expand, I want southwest Georgia to get that expansion,'' he said. "But we have a hard time competing with other plants because their health costs are lower.

"We're about getting rural health costs more competitive, and we believe CON is a way to do that. ... We're about competition. It's the American way.''

But hospital officials say the free-market model of competition that supporters of gutting the CON law like to hold out doesn't apply to their business.

Les Beard, CEO of Emory Eastside Medical Center in Snellville, said hospitals by law must care for every patient who walks in the door, whether they can pay or not.

"It's not a free market,'' he said. "If it were, we'd be telling you we have to get rid of CON.''

On the other hand, physician-owned facilities historically have been free to take only paying patients.

Hospital officials say such "cherry picking'' siphons off the patients they rely on to boost their bottom lines, leaving mostly Medicaid enrollees and the uninsured.

Phil Wolfe, president and CEO of Gwinnett Medical Center in Lawrenceville, said such a patient mix puts tremendous financial strains even on large urban hospitals and is a prescription for disaster for rural facilities already operating on thin ice.

"We never minded competition,'' he said. "But this isn't a level playing field.''

Study panel

A state study commission considered such concerns during a two-year review of Georgia's CON law and issued its report in December.

Among other things, the panel recommended that the Legislature make it easier for doctors to open freestanding outpatient surgical centers. However, to address the fears of hospital officials, the commission also suggested that doctor-owned centers be required to provide charity care.

The commission was deeply divided on what to do with freestanding medical facilities and a host of other recommendations.

In light of that, one of the bills now pending before the General Assembly would limit changes to the CON law to the recommendations the panel agreed upon unanimously.

Sen. Don Balfour, R-Snellville, the bill's sponsor, said they're common-sense changes that would make it easier for applicants to obtain a CON when their proposals are non-controversial, such as renovating a building or moving a facility three miles or fewer.

"If you need a new roof on a building ... why do you need to do all this legal work and get a lawyer involved?'' Balfour asked.

On the other end of the spectrum is a bill sponsored by Rep. Jill Chambers, R-Atlanta, that would repeal the CON law. She's pitching it as a hands-off approach by government to what should be left to the market.

"Who are you and I to determine what a private industry should invest in?'' Chambers asked. "The more players, the more competition.''

Middle ground

Perdue's bill takes a position between those two measures. It doesn't do away with the CON law, but it does make major changes.

In keeping with the study commission's recommendation to give freer reign to doctor-owned medical centers, it would exempt freestanding outpatient surgical and radiology centers from the CON process.

Also following up on the panel's work, the bill would give such facilities two choices. They could agree to serve Medicaid and PeachCare patients to the same extent as competing hospitals and commit at least 6 percent of their adjusted gross revenue to caring for indigent patients. Or, if they don't choose to make the Medicaid/PeachCare commitment, they could designate at least 10 percent of their adjusted gross revenue to indigent care.

"We want to make sure that it encourages competition and does not leave the indigent behind,'' said Rep. Rich Golick, R-Smyrna, Perdue's floor leader in the House and the bill's sponsor. "A reasonable compromise is needed.''

But hospital officials say the governor's bill is anything but a compromise.

Kevin Bloye, vice president of the Georgia Hospital Association, said essentially deregulating outpatient surgical and radiology centers would leave only hospitals subject to CON.

"They position this proposal as a free-market, consumer-choice initiative, but they are creating perhaps the most unlevel playing field imaginable,'' he said.

Cancer center

Bloye said hospitals also have similar objections to a provision in the governor's bill that would carve out an exemption in the CON for an Illinois-based company that wants to open a small hospital for cancer patients in Georgia.

The provision incorporates two bills introduced into the House and Senate several weeks ago on behalf of Cancer Treatment Centers of America.

Golick, whose job will be to steer Perdue's bill through the House, acknowledged that it's likely to undergo changes as it makes its way through the process.

It's getting fairly late in the session for lawmakers to wade through such a complicated measure.

But Rice said he's confident it can be done.

"It's a complex issue,'' he said. "But there have been hours and hours of assessment put into this. ... We'll probably have something that is well cobbled together.''