The Ohio Valley Medical Center in Wheeling was one of the several West Virginia hospitals that closed recently. Photo by Lauren Peace.

Many West Virginians lack access to the health care services they need, as hospitals around the state struggle financially. Three community hospitals closed in the last two years. A fourth ended inpatient services. Others declared bankruptcy and began reorganizations in order to stay afloat.

These closures have been devastating to patients.

For people like Joe Hubbard in Wheeling, the sudden loss of hospital services was a matter of life and death. And for Lisa Tomblin in Fairmont, the loss of a hospital meant the loss of a prescribing psychiatrist. When her community hospital closed, she was left without access to mood-stabilizing medications in the midst of a pandemic, when other providers weren’t taking new patients.

Hospital executives and health policy experts say in West Virginia, and across the country, health care delivery is in crisis. That’s especially true in poorer communities. 

With fewer patients overall, and fewer still with good-paying private insurance, staying financially healthy is becoming more and more of a challenge for hospitals. The pandemic has only increased the financial strain.

“The hospital industry has been amazingly good at altering our delivery of services in order to meet the circumstances,” said Dan Lauffer, president and CEO of Thomas Health, a 383-bed hospital system based in South Charleston. “We’ve now reached a stage where there’s not much flexibility. The legislature needs to understand the gravity of the problem.”

But so far this legislative session, when it comes to hospitals and health care, West Virginia lawmakers have focused on a very narrow — and disputed — form: the deregulation of the health care market through proposed changes to Certificate of Need laws (CON). Lawmakers have introduced bills doing everything from applying more stringent requirements for alcohol and drug treatment facilities, to loosening requirements for hospitals. One bill even seeks to eliminate the process altogether. 

But what even is a certificate of need? And would eliminating it help or hurt access to health care for West Virginians like Lisa Tomblin and Joe Hubbard? It’s not black and white.

History: in brief

If you haven’t heard of certificate of need laws, you’re not alone. Starting  in the early 1960s, states used CON laws to try to curb health care spending by making medical providers prove that a need existed before they could open new facilities or expand services to a community.

The rationale was that if providers flooded a community with more services than that population could support, money would be wasted, the cost of services would go up and patients would bear the burden.

But over the last three decades, in West Virginia and around the country, CON laws and the way they’re enforced have remained a point of contention, undergoing frequent changes. They come up nearly every legislative session in West Virginia, including last year.

West Virginia hospitals and medical centers must go through the CON process any time they want to expand services, purchase new equipment that costs a certain amount, or take over services from another provider. Physicians operating independent practices do not have to obtain a certificate of need.

The process is overseen by the state’s Health Care Authority, which aims to regulate the health care market in an “economical manner that discourages unnecessary duplication.” 

West Virginia’s law, in effect since 1977, contains a number of exemptions for very specific situations, like renovations to a skilled nursing facility or an additional forensic hospital bed. But for the most part, anybody who wants to introduce new medical services to a community in West Virginia must apply for a certificate of need.

The process is lengthy and the application can be expensive — ranging from $1,500 to $35,000 depending on the size of the project, just for a review and with no guarantee that the certificate will be granted. And since at least 2017, advocates and legislators have been calling for its elimination.

The good, the bad and the inconclusive

As of December 2019, 35 states had some form of CON process in place. But the way those processes work in each state varies drastically.

That can make evaluating the overall effectiveness of these programs tricky, said Carmel Shachar, director of the health law policy center at Harvard Law School. 

“Not every certificate of need process is exactly the same, so that may be why the data is mixed,” Shachar said.  

While some studies show that CON requirements may marginally affect costs for patients, others indicate that CON laws reduce competition and can limit patient choice when it comes to medical services. A study published in the Journal of the American Medical Association found no evidence that CON impacts quality of care.

Shachar said that we can think about health care like a tree. In states with effective certificate of need laws, the process might act as a landscaper.

“If we let plants grow everywhere, sometimes they grow in ways that are unhealthy,” Shachar said. “So certificate of need programs could be used to distinguish between care that is needed, versus care which might have a good return for investors, but don’t necessarily serve the best interests of the community.”

That’s especially true when it comes to higher cost, shoppable services, said Dr. Adrian Diaz, a research fellow at the Institute for Healthcare Policy and Innovation at the University of Michigan. Take low-value imaging centers, for example.

“If there’s a lot of them around, and they’re being advertised, there’s probably going to be some evidence for over-utilization,” Diaz said, who noted that CON could be effective at preventing unnecessary health care spending, by limiting the ability of those centers to be built if there isn’t a need.

But the trouble, according to Diaz, is that while there might be some good in that limitation, CON laws create a lot of red tape for services that could actually provide value to patients.

“That’s the knock for these programs, especially at a time like now,” Diaz said. 

The pandemic has highlighted a need for more hospital beds and the barriers that CON put in place to expanding access to care. But it’s not just in a pandemic, when resources are particularly thin, that proponents of the bill’s elimination say the barriers are regressive.

“These laws prevent competition. They go against any rationale of allowing free markets to work and operate and compete,” said Guy David, a professor of health policy and medical ethics at the University of Pennsylvania. “They’ve been a failed experiment.”

David said that instead of efficiently regulating, CON laws can create a monopolized market, where one major provider has the resources to expand its own services, preventing smaller medical providers from entering.

The debate in West Virginia

That CON laws are antiquated, prevent competition and limit access to care is the argument upon which some West Virginia lawmakers are resting legislation that could chip away at or completely eliminate CON requirements in the state.

“Laws that prevent people from opening and expanding businesses in West Virginia are a problem” said freshman Delegate Chris Pritt, R-Kanawha, who is the co-sponsor of House Bill 2077, which seeks to eliminate the law in its entirety.

“I’ve spoken with people that want to do new things in the health care sector in West Virginia and they can’t because of certificate of need,” Pritt said. He did not provide names or contact information for the people he said he’s spoken with.

“We need more access to medical services in West Virginia and we have a law that’s preventing them from happening,” Pritt said. “That just doesn’t make sense.”

The American Medical Association agrees. In a five-page resource packet, the association provides evidence and arguments to support the repeal of the law. A bullet point in the packet reads, “CON regimes prevent new health care entrants from competing without a state-issued [CON], which is often difficult to obtain. This process has the effect of shielding incumbent health care providers from new entrants. As a result, CON programs may actually increase health care costs, as supply is depressed below competitive levels.”

But a representative of the state’s hospital association told the Herald-Dispatch in Huntington that its members oppose the bill, and think it “causes too much uncertainty at a time of unprecedented issues for hospitals in the country.”

And Joyce Gibson, a union representative for SEIU District 1199 which represents  health care workers in West Virginia, Ohio and Kentucky, said the CON process is one of the only mechanisms through which major hospital systems can be held accountable to the public; by consumers and employees.

“When you don’t have a CON, one system can buy, buy, buy, without investing in what it already has,” Gibson said. “I call it ‘the Walmarts of health care.’” 

“We want to be able to be included in that process and have the means to file objections. CON laws give us that opportunity,” Gibson said.

Protecting patients still remains an issue

So what does all of this mean for patients? Experts say that’s unpredictable, because health care access depends on so much more than certificates of need.

Some advocates for keeping CON laws view the process as one of the few mechanisms through which patients could be protected in the event of a hospital closure or loss of community services, because the laws can trigger review boards and bring stakeholders to the table if there’s going to be a loss of care (although that’s not the case in West Virginia).

In states like New Jersey and Connecticut, the laws require increased transparency and the formation of a consumer review board in the event of a sudden closure, which can provide patients with greater warning and bring stakeholders to the table to discuss options to fill the need. 

But experts like David, from the University of Pennsylvania, say that those functions extend well beyond the law’s original intent.

“We need to think about how we provide equity in access to care. We have a real crisis around access to high quality medicine,” David said. “But certificate of need is not the way to solve the issue. It was a failed experiment and it should have been abolished a long time ago.”

Instead, David said, solving the health care access crisis will require something much bigger; the redistribution of wealth to make impoverished communities more sustainable and attractive to providers.

But absent a massive societal shift, in a state like West Virginia, where three hospitals closed in just 18 months, the sudden loss of health care services remains a very real threat to the people where closures occur. And these closures do happen, they often leave patients with very little warning or ability to transfer care.

That, said Lindsay Allen, a professor of health policy at West Virginia University, is something the state should be thinking about addressing. And it can happen independently of certificate of need. 

“If there’s going to be a hospital closure, coordination at the state level, at the provider level and at the community level could be key to preventing what happened [in Fairmont and Wheeling],” Allen said. 

And beyond that, Lauffer, the CEO of Thomas Health, said that there’s need for increased attention and support from the legislature to form creative solutions to make hospitals more sustainable.

“We need people to step up and really start to examine this,” Lauffer said. “Maybe it’s a task force with government and industry representatives. There has to be a dialogue and there has to be action.”

Currently, there’s no legislation being considered that would seek to assist communities in the event of a sudden loss of care or establish a task force to address the needs of struggling hospitals. HB 2264 has passed the House and is in committee in the Senate.

Lauren Peace is a Report for America Corps Member who covers public health.