South Carolina’s health care future looks brighter now that the state’s Certificate of Need (CON) statute has finally been repealed.
The 1970s law, which required a permit receipt from the state before a new health facility could be built or additional health care offered, was ostensibly enacted to protect the financial viability of hospitals in Palmetto State. But research from George Mason University’s Mercatus Center found that the CON statute resulted in higher prices, less access to care and, in many cases, lower quality care.
The fact is, there have always been better ways to support healthcare providers in our state and drive better patient outcomes. As the health care policy conversation in South Carolina now shifts, policymakers should take the opportunity to explore more effective measures to support hospitals in the state.
It is common knowledge that the prices of prescription drugs have skyrocketed; from 2008 to 2021 they increased by about 11% per year. SC has one of the highest uninsured rates in the country at 10.8%, keeping hundreds of thousands of South Carolina residents from buying life-saving drugs or getting the care they need. saving programs like 340B has risen to new levels.
For more than 30 years, the 340B Federal Drug Pricing Program has safeguarded access to life-saving drugs and health services in our nation’s most vulnerable communities. By enabling safety net hospitals to purchase discounted pharmaceutical products, 340B has provided these facilities with the financial support they need to provide more comprehensive services and offer low-cost or free medications and charitable care to the most vulnerable patients. There have been questions about the program’s rapid growth and calls for more oversight. These should be addressed, but they are not a reason to significantly alter or cancel the program altogether, as Congress might attempt to do with HR 198. The bill would essentially freeze Program 340B and subject its current participants to mountains of bureaucracy. While the legislation also contains some robust provisions, the bad outweighs the good, and the fact remains that there are simply better ways to restore the 340B program to its original intent and eliminate waste, fraud, and abuse.
The ability of hospitals to use market forces to avoid closures could also be under threat, due to excessive activity by the Federal Trade Commission (FTC) which has been overly restrictive on hospital mergers. neither hospitals nor doctors work together to build a more comprehensive and efficient health care system. Today’s reality is very different.
Consolidation of hospitals and healthcare systems into more resilient and patient-focused providers should be seen as a necessary solution across the country. Such mergers can help healthcare providers more fairly distribute the growing burden of patient care costs, and data has shown that merged rural systems have closed less frequently than their independent counterparts. Notably, hospital systems have also demonstrated that mergers can be beneficial to the community by reducing the cost of care for both patients and providers without sacrificing the benefits of market competition.
Contrary to the claim by opponents of hospital consolidations that mergers and acquisitions raise prices for patients, no consistent statistical relationship has been established between consolidations and hospital price increases. In fact, a 2021 study by Charles River Associates found that consolidations have not only reduced post-merger hospital operating costs, but have also led to significant improvements in key indicators of patient care quality, including rates readmission and mortality.
There is no question that we should be supporting South Carolina’s vital safety net and rural hospitals. But we must do so in a way that best benefits patients. Promoting policies that reduce, not increase, barriers to care and take advantage of free market competition is the best way to support critical health care in South Carolina communities.
Oran P. Smith, Ph.D. is a senior member of the Palmetto Promise Institute
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