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Business, Free Enterprise and Constitutional Issues; Pro-Life and Pro Second Amendment. Susan Lynn is a member of the Tennessee General Assembly. She serves as Chairman of the Consumer and Human Resources subcommittee, a member of the Finance Ways and Means Committee and the Ethics Committee. She holds a BS in economics and a minor in history.

Monday, October 15, 2007

The Big CON

Stacey Campfield writes about the Tennessean's article on certificates of need.

I filed a bill this year to do away with the CON process in Tennessee. The history of CON is very interesting. The process was never meant to prevent private investment dollars from investing in health care facilities but that is exactly what the CON process does.

A Brief History of CON

CON evolved out of the Depression and WWII; at a time when private dollars to build healthcare facilities were more than scarce. In order to expand the local hospital or to buy a much needed piece of equipment, communities formed committees that worked to raise charitable dollars, and to decide how to spend those dollars.

After the war, the federal government began to aid the local groups by offering grants as assistance. By the 1960's, the American Hospital Association successfully convinced the New York State legislature to pass a state law making the process a state function. Only their process not only "planned" how to spend charitable dollars, and government grant dollars, but it additionally had the insidious ability to restrict private investment dollars. This meant that in order to build a new facility private investors now had to seek permission from the state in the form of a certificate of need, a.k.a. CON.

Ten years later, AHA successfully passed CON legislation at the federal level. However, the federal law was repealed in only three years as analysts quickly realized the negative effects on competition, innovation and price.

Unfortunately, the AHA and other lobbyists were able to convince most states to keep their CON laws. Today, 32 states require certificates of need for varying items.

CON is protectionism at its worst. A CON costs an incredible amount of money, time and hassle to get.

Read More About CON

A great little book by the John Locke Foundation, Certificate-of-Need, It's Time For Repeal, explains the process quite well. Here is a review.


Anonymous said...

Rep. Lynn is wrong about taxpayer subsidies for Williamson and Maury. While they are governmentally owned, neither hospital receives ANY taxpayer subsidies and have not for many, many years.

Brian A. Lapps, Sr.

... said...

Dear Mr. Lapps,

Please read my post. I make no reference to taxpayer subsidies of either hospital. No have no knowledge of any subsidies at all.

It is Mr. Hobbs who made the assertion.

Anonymous said...

Presuming to be able to decide what "need" is has always been the problem in these cases. Unfortunately Karl Marx died before letting us know the difference between legitimate need and the other kind.
As long as any certificate of need process is based on emotion there will be a problem. Banks do a process something like a certificate of need when they review a business plan before loaning money. In that case it is an act of responsibility to the owners of the bank and a further act of reasonable service exchanged between employee and employer.
The problem is that we can not trust our government, especially the state government, to prevent unwise spending either state money or at the county and municipal level. I offer as proof the extreme proliferation of industrial development sites all over Tennessee. Unlike the federal tax cut that gives money back, nearly every county in Tennessee is operating a program of tourism, economic development or various shades, colors or deviations of such tax extraction plans to preserve and attract manufacturing jobs. Industrial parks are still a protected class government purchases that can be taken by eminent domain. Not counting the biggest cities, it is at least $48 million a year or about half a million per county. These programs extract taxes to boost the economy while the Bush tax cut gives the money back. Can both opposite actions improve the economy?
No data point in government data bases proves that this has preserved one single industrial job. The number of industrial jobs shrinks every year because of productivity and a restructuring of the economy. We have enough industrial parks in Tennessee for every citizen, able or not, in Tennessee to have almost a 30 foot by 30 foot square to work in. We could move 20% US manufacturing to the state of Tennessee with what we have now.
I have no problem with some kind of certificate of need as long as it protects the taxpayer from unwise use of government money, including the excessive use of debt. Since the legislature seems unable to master that skill for its every day operations, I think it is a little silly to expect that their work in this area to have any true value as they try to tell everyone else how to do it.
It would be really great legislation that would be able to end the emotional arguments about where we need the next road, convention center, industrial park, toll bridge, stadium or party bunker.

Anonymous said...

According to the last audit of the Willimnson County Government in 2007, The county spent $1,769,700 at the local hospital for ambulance service. You might call that a fee for service or a subsidy.
See Adobe page 43/231 for the explaination in the Controllers report and the amount is on Adobe page 167/221. I am too lazy to look up Maury County. Go to the Comptrollers web site and go to divisions and select county audits and click on the county audit section from there click on whatever county you like to see their latest audit and there are even old audits in the same location.