It Took More Than 15 Years for a South Carolina Hospital To Get Permission To Be Built –

After more than 10 years of state regulatory approval, construction finally started in May at Fort Mill’s new hospital.

Residents of this fast-growing suburb in Charlotte would not have to worry about the COVID-19 epidemic if there was no long delay. The coronavirus has strained the capacity of hospitals across the country, but especially in Southern states—at one point during the recent “delta wave,” more than 85 percent of hospital beds in South Carolina were filled—and put a spotlight on the availability of medical care in America, which has fewer hospital beds per capita than most other developed nations.

Fort Mill’s events offer an explanation.

Piedmont Medical Center was required to go through the Certificate-of-Need process in order to build a hospital. This involved going to the Supreme Court of the State to fight a lawsuit from a rival. This was all to create a 100-bed facility, which the South Carolina Department of Health and Environmental Control in 2004 determined was necessary in the area.

In many instances, however, the “need” does not suffice. As with zoning and mandatory environmental review policies, which may be good-intentioned but can often be misused by “not my backyard” activists to tangle development in expensive piles of red tape. Existing hospitals could use CON laws in many states to prevent or delay new facilities opening.

Fort Mill experienced exactly this. Piedmont Medical Center was challenged by a Charlotte-based hospital chain. The state then refused to allow Piedmont to construct the new hospital. Construction was delayed several years by the litigation that cost many thousands of dollars. Americans for Prosperity is a think tank that promotes free markets and argues that the mere threat of lengthy expensive reviews can deter investment that might otherwise occur.

“Politics and legal challenges from competitors—not public need of quality health facilities and services—are the key drivers of the CON process in South Carolina,” conclude Kevin Schmidt and Thomas Kimbrell in a recently published report looking at CON laws in four states.

CON laws have been passed in over 30 states. Even though they can be different from one location to the next, the results are consistent across all states: higher prices, less medical care and regulatory obstacles for anyone who wishes to improve that. For example, in South Carolina, 25 percent of CON application submissions over a three-year span were rejected or withdrawn. All of these applications represented over $450 million in investment for the state, but it was denied or withdrawn because regulators blocked the application.

The report also notes that even the South Carolina Hospital Association president, who opposes eliminating CON laws, stated to the legislature that it “doesn’t serve the community.”

A major problem in times of pandemics or other emergencies is artificially limiting access to health care. But CON laws are harmful for public health regardless of whether a novel coronavirus is used. Research published by Mercatus Center (a libertarian think tank) in 2016 shows that CON-law states have higher death rates among heart patients. CON laws can also be a factor in health care insecurity in rural areas, as they make it more difficult for medical professionals to treat patients in wealthier areas.

This is due to inertia as well as cronyism. CON laws, originally passed to cut health care costs in an ill-conceived effort, actually led to rising costs due to a reduction of the number of facilities available. The mandate that states must pass CON laws was reversed by Congress in the 1980s. The Federal Trade Commission (FTC) and Department of Justice, have been pushing for states to abolish them since the middle of 2010. In 2016, the agencies said that CON laws pose significant competition concerns. They also do not generally appear to have had their intended health benefits for patients.

It seems that getting the permission to build hospital in a CON-restricted state takes more time than getting it approved.