Senate File 18 generated plenty of interest during a subcommittee last Wednesday. The bill would eliminate the certificate of need process relating to the development of a new or changed institutional health service.

Karla Fultz McHenry, who registered for the bill, said the bill goes much further than her clients have been willing to go in the past. She’s with the Iowa Independent Physican Group, Medical Associates Clinic and Health, and The Iowa Clinic, P.C.

“It opens up what those of us who are in favor would call a free market for health care,” McHenry said. “The physicians I work for would like to see this process, potentially a modified process, so that the physician groups can be exempt from the Certificate of Need process. They believe they can reduce cost for the patients and communities they serve by being able to build ambulatory surgery centers to take care of patients outside of the hospital setting.”

Basically the certificate of need process requires a percentage of payment of the whole project just to get in front of the certificate of need board. Applicants must show why it is needed, but the potential competition is allowed to go and say it is not needed.

Opposition to the bill came mostly from folks affiliated with hospitals across the state. Iowa has been recognized as a low-cost, high-quality health care state and the claim is certificate of need is partially the reason why.

They say hospitals do not operate under a free market system. And hospitals must be open 24/7, ready to provide emergency services. Hospitals claimed they couldn’t lose out on providing those services, which are mostly profitable, because those services help make up for other services provided that cost the hospital money.

Nebraska and South Dakota were listed as states that do not have certificate of need.
Concern was also expressed about the potential impact to nursing home facilities. Another hospital CEO was concerned about a shortage of health care workers.

Two independent health care providers — providers who do not receive their salaries from the hospitals — testified before the committee in favor of the bill.

Tyler Raygor of Americans For Prosperity read the testimony of Belinda Lassen, a midwife from Sioux Center who was denied certificate of need when she wanted to develop a two-bed birthing center unit.

The budget was $250,000.

“When my certificate of need was denied in 2014, it had nothing to do with health care, safety, health care cost or duplication of services,” Lassen said in written testimony. “I clearly showed I was offering a service not available in any of the three opposing hospitals. It had everything to do with patronage outweighing community need.”

Lassen said the cost in the birthing center would be $5,100 for a low-risk patient. The cost for the same patient in a hospital is $18,000.

“The beneficiaries of certificate of need are the already established health care businesses who use and rely on certificate of need to shield them from any competitors,” Lassen wrote. “Losing in the certificate of need process are the patients who want the service and the health care workers whose livelihood and trade are restrained.”

McHenry said the midwives were doing home births and instead wanted to move from home births into an actual birthing center for increased safety. They’re still doing home births because they couldn’t get a certificate of need in the northwest Iowa community.

“They do them for the people who can’t afford to go to the hospital or for people in the community that need care but don’t have the wherewithal to meet their deductable to have a child in a hospital,” McHenry said. “Or it’s a choice — they don’t want to go to the hospital. They want a birthing center or a home birth.”

In that area of the state, the only choices that exist are a home birth or a hospital birth.
“Because the hospitals in that area have made a very conscious decision to oppose their certificate of need,” McHenry said. “I helped them set up a plan to go out and meet with community folks to have some conversations. I don’t think the community understood they were already doing home births. Once they figured that out, they still were opposed to them having a birth center in that area to this day.”

Dr. Kurt Korver, an Ear, Nose, Throat-otolaryngologist from Orange City, testified in person.

“There’s a growing health care disparity, especially in our area,” Korver said. “We have a lot of hard-working families where both parents are working and struggling to pay $1,000-1,400 per month for health insurance and that leaves them still with a $5,000 deductible. Back when people had low deductibles they didn’t pay attention to prices, but now they are.”

Korver said one-third of families are not getting the surgeries performed when they’re indicated because of the high deductible and high cost hospitals charge for putting tubes in a child’s ears.

“My charges for placing tubes, the most I get is $480,” he said. “But (the local hospitals) charge for a short 5-10 minute procedure are between $2,300-$4,300. Blue Cross is $4,300. In many cases the facility charges are almost nine times what I charge for performing the surgery.”

Korver said he already places tubes in his office routinely for adults and older children, but little kids can’t hold still, therefore they receive 5-10 minutes of anesthesia gas. Tubes, he said, are the most common pediatric surgery.

“Because of certificate of need laws, I’m not allowed to help these families save thousands of dollars on a short 5-10-minute surgery in my office,” he said. “How much money? Add my costs with the hospital costs and the little procedure costs $3,000-5,000. I should be able to do this for between $1,000-1,300 if I was allowed to have a facility.”

He also disputed the claim that rural hospitals would have to shut down if certificate of need was eliminated.

“I say 100 percent no,” he said. “I believe eventually it will make them more efficient and force them to compete at competitive prices like every other service that doesn’t have a monopoly.”

Korver is also involved in a federal lawsuit involving certificate of need in the state of Iowa.

“Certificate of need unconstitutionally monopolizes health care in Iowa,” he said. “I’ve gotten to the point where I really want to try to help the people who I think are the most neglected in the health care system. Not the people at the bottom, they get everything for free, it’s these hard-working families who between the two of them are making $80,000-90,000 and don’t get any subsidies and about one-third of them aren’t getting surgeries done.”

Those representing the hospitals were concerned the hospitals would be left to deal with any complications that resulted from surgeries done elsewhere.

Democrat Sen. Liz Mathis said she would not sign off in support of the bill.

“I do not want to see our rural areas go backwards with this,” she said.

Republican Sen. Jeff Edler said he’d like more information, especially on the concerns over post treatment transition if there are complications. He didn’t sign off, but said he’d like more information before moving forward.

Sen. Julian Garrett, who chaired the subcommittee, said he was in the same spot as Edler.

“It is rather dramatic we could hear about the cost savings (Dr. Korver) can provide,” Garrett said.

He said it is his understanding that the patients Dr. Korver could help are instead subsidizing the government patients.

“That has always been troubling to me,” Garrett said. “I’m not sure what the solution is, but it would seem like for this gentleman’s patients, those are really impressive, fantastic savings. It’s not just a couple of bucks here and there — it’s a huge difference. It looks like his patients or his potential patients are being way overcharged to make up for the fact that we don’t adequately provide for the Medicaid patients and the Emergency Room patients and so on. This is just a really tough situation.”