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Analysis

Florida Repeals CON Law, and One Hospital CEO Cheers

By John Commins  
   June 28, 2019

Cleveland Clinic Florida CEO Wael Barsoum, MD, says removing the artificial barrier to competition will improve access to care and lower costs.

Florida Gov. Ron DeSantis this week signed a repeal of the state's certificate of need law, and one hospital CEO couldn't be happier.

"I'm glad it's gone," says Wael Barsoum, MD, CEO of Weston-based Cleveland Clinic Florida. "It's better for our communities and better for our patients. Competition is a good thing. It drives lower costs and it drives better quality."

Removing artificial barriers to competition "forces providers to compete on a more level playing field," Barsoum says. "Areas that have been underserved will have the opportunity now to have more healthcare services."

"Organizations that have historically provided average or below average care will have to step up their game," he says. "Otherwise, other providers will come in and compete aggressively with them to force an improvement in quality."

Florida's CON laws, enacted in 1973, were scaled back somewhat about a decade ago and mainly regulate new and replacement hospital projects further than one mile from a main hospital, and some high-cost subspecialties such as organ transplants and neo-natal intensive care units.

The repeal takes effect on July 1.

Florida Hospital Association President Bruce Rueben took a neutral stance on the CON repeal, noting that the regulation "is intended to ensure that the full continuum of healthcare services are available throughout Florida regardless of community income levels or the number of people with health insurance."

"That safeguard to access for hospital services has been removed in an effort to promote competition for hospital services," Rueben said in prepared remarks. "Over time, our state will learn whether this goal is accomplished and whether it was worthwhile."

Barsoum says many health system executives unjustly fear that removing CON laws "is going to lead to kind of Wild West and hospitals are going to be popping up everywhere and everyone's going to start transplant programs and trauma programs."

"I don't think that's the case," he says. "Most healthcare leaders today are very, very savvy about the economics of healthcare, and recognize where there's an opportunity to better serve a community or where there's an opportunity to better serve a need."

"Most of our most of our communities are relatively well represented today, so I don't think that folks are going to be really excited about spending tens or hundreds of millions of dollars in areas just to compete. The market is going to drive where we see growth and where we see more competition."

The Federal Trade Commission for more than one decade has sharply criticized CON laws as anticompetitive, and the Trump Administration urged states to repeal their CON laws last December.

Proponents of the repeal have been fighting for more than a decade.

Although there appears to be a growing movement to repeal CON laws in several states, only 12 states now have none. Defenders of CON laws say they're needed to protect against niche healthcare providers "swooping in" and "cherry picking" profitable services and leaving safety net hospitals in the lurch.   

Barsoum dismisses that argument.

"'Cherry picking' is a great term that people like to lean on when they're worried about competition," he says. "But the truth is, there's no data that really supports that. The market pressures in healthcare are pretty significant, and starting subspecialized services or building hospitals is extremely capital intensive."

"Unless you really think you can do it better, and unless you really think there's a need, I don't think that you'll find healthcare organizations going into those areas because the burden of entry is relatively high."

Barsoum says CON laws have thwarted Cleveland Clinic Florida's expansion plans on several occasions through the years.

"For years and years, we were not able to open a hospital in Weston. It took many attempts before we finally got one open," he says.

"For years, we weren't able to start an open-heart surgery program when we were in Naples. We ended up selling our hospital there," he says. "There isn't a day that goes by that I don't hear from somebody on the west coast of Florida who asks when we're coming back."

"And over the last several cycles, we've applied to do bone marrow transplants here in our Weston hospital, and we've been thwarted by a very low-volume program that does not want to see us get into that market," he says.

"We have international patients and patients from all over the country who want to come to us for these types of procedures that we have not been able to do, which we will now start," he says.

Barsoum says he doesn't see any downsides to repealing the CON laws "when I look at it from a patient's perspective."

"I see potential downsides to healthcare providers who are looking to profit in healthcare without providing very high quality," he says. "You may find some groups that feel that the elimination of CON is bad because they don't do as well financially as they used to. That's a danger to them. In the end, it's a benefit to the community and a benefit to the patients."

“Organizations that have historically provided average or below average care will have to step up their game.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Wael Barsoum / Provided: Cleveland Clinic Florida


KEY TAKEAWAYS

Florida's CON laws mainly regulate new and replacement hospital projects further than one mile from a main hospital, and some high-cost subspecialties.

The repeal of Florida's Certificate of Need law takes effect on July 1.

Florida will become the 13th state to have no CON laws on the books.


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