Does certificate of need affect cardiac outcomes and costs?
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Does certificate of need affect cardiac outcomes and costs? Vivian Ho
Received: 4 December 2006 / Accepted: 10 January 2007 / Published online: 6 March 2007 © Springer Science+Business Media, LLC 2007
Abstract Several U.S. states enforce Certificate of Need (CON) regulations, which limit the number of hospitals performing open heart surgery or coronary angioplasty. CON regulations were intended to restrain cost growth and improve quality of care. This study compares mortality rates and costs for cardiac care in states with and without CON. CON appears to raise hospital procedure volume and lower the average cost of care. However, CON is associated with little reduction in inpatient mortality, and it may lead hospitals to operate on more patients than they would otherwise. The claimed welfare benefits of CON regulations require careful reconsideration. Keywords Regulation · Certificate of need · Outcomes assessment · Cardiac surgery · Costs JEL Classifications I110 Analysis of Health Care Markets · I180 Health: Government Policy, Regulation, Public Health
Introduction Several U.S. states enforce Certificate of Need (CON) regulations for cardiac care, which limit the number of hospitals that may perform open heart surgery or coronary angioplasty. These rules were originally implemented by regulators who argued that controlled entry into markets for new technologies would restrain cost growth and improve the quality of care. Limiting the number of providers would avoid unnecessary duplication of costly, highly specialized manpower and facilities. Medical evidence
V. Ho(B) Baker Institute for public policy-HS 40, Rice University, 6100, Main St., Houston, TX 77005, USA e-mail: [email protected] V. Ho Baylor College of Medicine, Houston, TX, USA
Does certificate of need affect cardiac outcomes and costs?
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suggested that minimum case loads were essential to maintaining and strengthening the skills required to perform complex cardiac procedures. Therefore, restricting the number of facilities that patients could choose from also insured that each certified facility had enough patients to maintain their expertise in complex cardiac care. Because provision of open heart surgery and angioplasty require a substantial fixed cost investment, greater centralization of services through CON was also likely to yield economies of scale. Many potential providers without CON approval argue that these regulations are anti-competitive. With fewer competitors performing open heart surgery and angioplasty in a market, certified providers can charge higher prices for their services. Because publicly available data on charges for cardiac procedures does not accurately reflect the prices actually paid by insurers and patients for the care they receive, this hypothesis cannot be directly tested. However, past studies cast doubt on the argument that CON regulations restrain cost growth or improve quality in the cardiac care market. For instance, greater competition (as opposed to regulation of entry) has been found to lower average expendit
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