“Congress should also act now to pre-empt certificate-of-need laws because they interfere with the proper functioning of health care markets in interstate commerce.” So states the April 30 commentary (“State certificate-of-need laws must go”) calling for elimination of such laws in dozens of states.
Minnesota’s state “Certificate of Need” law went away a long time ago. It was in effect only from 1971 to 1984. (Since 2004, according to the National Conference of State Legislatures, Minnesota has only a modified public review process for hospitals seeking exceptions to the state’s hospital bed moratorium law.) So if health care markets are “not functioning properly” here, the blame cannot be laid at the door of Certificate of Need.
What was the certificate of need, and why was it operational? Having served as the vice-chair of the Metropolitan Health Board (a subset of the Metropolitan Council) from 1971-75, I have a partial answer for this.
Health care, at that time, was still primarily a nonprofit business, although that was about to change on the national scene. Newer and increasingly more expensive diagnostic technologies were coming on the market, and there was a concern in government that health care costs would balloon when every doctor’s office might want a new CAT (computer-assisted tomography) scanner at a cost of $50,000. (I know, it seems quaint today, both the cost and the concern.) Why not encourage sharing of such technologies?
Thus a process was put in place by the Minnesota Legislature to review new health care costs that exceeded a certain amount. They called the process “Certificate of Need.” At the Metropolitan Council, professionals in the health planning arena were hired as staff to the Health Board to advise its citizen members as applications for expensive equipment or buildings were received. These plans had to pass through the Health Board for review.
As vice-chair of the board, I was asked to chair the review committee for a University of Minnesota application for what was then termed the “B-C” building. The university had to make a case for its need for another new building. The staff advised, and the task-force citizen members played their part by asking informed questions. That’s how the public review process worked.
The university, of course, received permission to move ahead with the building project, which today is known as the Phillips-Wangensteen Building. That permission would be given was never in doubt. But in the exchange the Health Board members also moved forward their agenda: to gently remind the university of its responsibility to the larger community that supported it.
The result of this negotiation was an offer from the university to attend to its community obligations as well as its building plan, and this took the form of two major commitments: 1) to assist the expansion of the Community-University Health Care program, commonly known as CUHC, and 2) to expand support for its Rural Physician program.
About this time, a new force was emerging on the national health care scene. It was called “for-profit health care.” The best illustration of the trajectory of this drastic change to health care in this country is the story of the national health giant Hospital Corporation of America, also known as HCA or, on the Big Board, as HCA Holdings. HCA was founded in 1968 in Nashville, Tenn., by a couple of doctors. It began as a chain of hospitals, but it soon became a harbinger of a new health care reality.
HCA was a for-profit corporation, not a nonprofit, and it was not shy about its intention to seize a share of the rapidly growing health care profits of America.
HCA also took a place at the table of philanthropists. By the time I was working in Washington in the 1980s, HCA was a prominent member of the Council on Foundations. In other words, the corporation was making enough money off the health care system in this country, much of it from Medicare as well as private insurance, to give quite a bit of it away.
Events took a downward turn for the corporation in 1993, when the government brought a number of lawsuits against HCA regarding its questionable billing practices with Medicare. By the time the dust settled 10 years later, HCA paid the government $2 billion to settle criminal fines and civil penalties for systematically defrauding federal health care programs.
But don’t give up on the HCA for-profit health care story yet. In 2011, HCA sold for $379 billion, in what Reuters (in 2015) called “at that time the largest private-equity backed IPO in U.S. history.”
Today HCA has revenue of $46.6 billion and net income of nearly $4 billion. So much for seeing health care as a right, or even as a charitable service, as did the nuns who used to comprise the nursing staff at Catholic hospitals long ago. We’ve even come a long way from certificate-of-need review. Or any review, really, that would tamp down runaway profits for shareholders for those health care companies that operate as profit-making organizations.
So far, Minnesota has resisted the Wild West lure of for-profit health care. We have amazing nonprofit health care leadership in this state, from the Mayo Foundation and Clinic, the University of Minnesota Health Sciences and Fairview system, and Allina Health Care and Abbott Northwestern Hospital. But there are forces of change operating nationally, notably those that are pushing health care providers toward the for-profit model.
Although these forces are interested in “the health care markets in interstate commerce,” they are not particularly interested in our health.
Judith Koll Healey is a writer in Minneapolis.