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March 27, 2019

Certificate of Greed

President Donald Trump seems to enjoy consistent support from a relatively steady portion of the population. My completely unscientific analysis, though I did ponder this statement deeply for a minute while wearing a cardigan sweater and stroking my professorial beard, breaks his persistent fans into two groups.

The first seems to be characterized best as the ‘poke ‘em in the eye’ crowd. When the president jabs the establishment, whoever that is, they love it because they get to enjoy the visceral reaction flowing from their personal frustrations.

The second group, however, tolerates the antics in exchange for getting tangible policies and executive actions consistent with what they believe is best for the country. Supreme Court justices and border security are two such examples.  Another thing frequently cited by this group, even though it gets far less media or Twitter attention, is Mr. Trump’s pro-market approach to deregulation.

Of particular note to independent physicians is the administration’s quiet campaign against Certificate of Need (CON) laws. You might’ve missed this because ‘quiet campaign’ is not what you typically expect from the president and it is a bit beyond his direct power since CON regulations are set at the state level.

But, in a broad, sweeping report to the president last December about how to fix the healthcare system, three of his cabinet secretaries took very specific aim at the anti-competitive effects of the increasingly anachronistic CON scheme.  Now, some state legislators are taking up the banner in trying to get these scaled back, if not repealed entirely.

Recall that CON laws came about in the late 1970s in response to an ill-fated cost containment measure from the Nixon administration (thanks Tricky Dick). Mr. Trump’s pro-market predecessor, Ronald Reagan, repealed that federal mandate in 1986 as evidence was already mounting that the idea was causing more harm than good. Here we are, over 30 years later, and only 15 states have eliminated the CON laws. As a westerner, I am happy to note that the vast majority of the states that actually welcome real competition are located out here on our side of the country.  Cowboy up.

The report to the president lays out the evidence that all this idea has accomplished is the protection of large regional health monopolies that increase cost with no demonstratable improvement in quality or the amount of charity care delivered.

We have been discussing the importance for independent physician practices to become a care delivery platform. While not always the case, when you can expand to include facilities, you open new opportunities that make your platform is stronger and more sustainable. CON laws generally function to protect established hospital systems and limit options for physicians. That is just reality and it is wrong.  If you care about your independence, this issue likely matters to you.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.