Report: West Virginia health care regulations blocked $43.7M in investments

(The Center Square) – West Virginia’s certificate of need law prevented at least $43.7 million in health care investments between 2017 and 2020, according to a report published by the Americans for Prosperity Foundation.

Certificate of need laws, also called CON laws, are regulations that require health-care providers to get approval before expanding health care services, acquiring new facilities or making other capital investments. The government can decline applicants if it determines the investment is not necessary for the community, but the report found that it often blocks key investments and pits health-care providers against each other as they seek favor from the government.

According to the report, these regulations encourage health-care providers to fight against expansions from other providers. It can also cause years of litigation, which prolongs the process and costs the provider thousands of dollars in fees for attorneys, consultants and expert testimony.

The report found that 20 CON applicants submitted by health-care entrepreneurs between 2017 and 2020 were ultimately withdrawn after competing providers filed opposition, which prevented about $43.7 million worth of proposed health-care investments in the state.

“West Virginia’s certificate of need law empowers incumbent providers with veto power over health care investment,” the report’s authors, Kevin Schmidt and Thomas Kimbrell, said in a joint statement.

“Providers can drag out CON applications for needed services for years and add thousands of dollars in legal fees,” the authors said. “It’s no surprise that our review identified more than 20 providers who decided to forfeit their application fees rather than fight for approval in a rigged system.”

Supporters of CON laws argue that they prevent unnecessary investments and encourage health-care providers to work together. However, the report found that they ultimately stifle competition because providers can pursue litigation to block investments that might compete with their existing services.

According to the report, West Virginia has 44 CON requirements, which is higher than most other states. It also includes five moratoria that delay investments in opioid treatment programs; adding intermediate care beds; adding beds for those with mental disabilities; adding skilled nursing beds; and developing, constructing or replacing skilled nursing facilities.

Even when CON applications are finally approved, investments could be delayed for years, according to the findings. In one example cited in the report, the West Virginia University Cancer Institute sought to launch a lung cancer screening program that would be partially funded by grants to ensure that no eligible resident would be turned away because of an inability to afford the service. Yet, one competitor that provides similar services managed to hold the project up with about three years of litigation until a court finally allowed the project to move forward.

Most states in the country have certificate of need laws. There are only 15 states without such laws on the books.

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