CON bill won’t include section making it easier to open a competing hospital to Ballad
NASHVILLE, Tenn. (WJHL) — Language that could have made it easier for competitors to open hospitals in Ballad Health’s footprint did not make it into a certificate of need bill Wednesday, prompting one local legislator to say he “would have liked to have seen this legislation go further.”
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Rep. Clark Boyd (R-Lebanon) filed a House bill to loosen certificate of need (CON) laws to reduce barriers for health care providers wanting to establish competing services. Amendments to that bill, however, fell short of a call by many House members to eliminate CON requirements for building new acute care hospitals, with House members fearing the entire bill could be killed in the Senate if that provision remained.
“I understand where we are in terms of negotiations with the Senate and what we feel we can actually pass as a body in the House,” House Health Subcommittee Chair David Hawk (R-Greeneville) said during discussion of the bill in his subcommittee.
“I would have liked to have seen this bill go further.”
CON laws require providers to undergo an often lengthy process that sometimes results in denial of their requests and is often opposed by existing providers. Critics have said the laws let existing providers avoid competition that would benefit consumers.
CON’s stated original purpose was to try and avoid unnecessary duplication of services, especially when they require expensive capital investment, out of concerns unfettered competition could actually increase, rather than decrease, healthcare costs for consumers.
Many states have repealed CON laws entirely, and Tennessee has been chipping away at its restrictions in recent years. A number of legislators want to repeal the law entirely, and a CON reform working group developed a proposal early this year that would have kept CON laws in place only for limited types of facilities and services.
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The group held three meetings with more than a dozen stakeholders, including Ballad Health. Its recommendations included eliminating requiring a CON to build an acute care hospital in a county of more than 100,000 people, which includes Sullivan and Washington counties — home to four Ballad hospitals.
The CON report noted that supporters said that change would result in increased access to care, promote competition, and “create competition in monopolistic markets.”
Ballad has a hospital monopoly in Northeast Tennessee after being created in 2018 due to legislation that protected the merger of Wellmont Health System and Mountain States Health Alliance from federal antitrust lawsuits.
The original “terms of certification” that govern Ballad’s monopoly in Tennessee and its “Certificate of Public Advantage” (COPA) included language preventing the system from opposing a CON.
Ballad successfully lobbied the state agencies that provide the “active supervision” required (Tennessee Department of Health and Tennessee Attorney General’s office) to have that provision removed from the Terms of Certification in 2022.
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That change and another that allowed Ballad to require some providers to sign non-compete agreements occurred with no public input and even without the apparent knowledge of legislators. The changes prompted a letter signed by five area representatives, which referenced “a groundswell of concern in our communities” about the changes.
The authors, including Kingsport Rep. Bud Hulsey, Washington County Reps. Rebecca Alexander and Tim Hicks, Carter County’s John Holsclaw and now-former Johnson County Rep. Scotty Campbell, called the lack of public notice or community input “counterintuitive to the process that resulted in the awarding of the COPA.”
They encouraged TDH Commissioner Dr. Ralph Alvarado and Attorney General Jonathan Skrmetti — both new to their jobs at the time — to “consider the input from community stakeholders before making any additional changes to the Terms of Certification.”
The CON Reform Working Group document shows that during discussions, stakeholders who opposed lifting CON requirements on new hospitals cited a potential impact on rural hospitals attached to urban/suburban systems, and argued that competition by for-profit systems could create stress on safety net systems. Ballad has rural hospitals attached to its urban ones, and is a safety net system.
Supporters tried to account for that, saying a CON repeal for hospitals could include language assigning charity care requirements.
Boyd’s bill would allow outpatient surgery centers without a CON starting in 2027. Outpatient diagnostic centers, which often perform things like MRIs and mammograms, could open without a CON starting in 2029.
The bill goes to the Senate Health and Welfare Committee next. Sen. Rusty Crowe, a Johnson City Republican whose income is derived from consulting work with Ballad in hyperbaric and wound care, chairs that committee.
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