SC Hospitals Say Gov. Haley’s Veto Likely to Cost You Money

One of Gov. Nikki Haley's vetoes in the South Carolina budget that just went into effect July 1st could end up costing you money, according to state hospital officials.

Here's what happened: Haley vetoed $1.7 million for the state Department of Health and Environmental Control to run the Certificate of Need program. That program, also known as CON, requires hospitals and other medical facilities to get approval from DHEC before expanding, building a new facility, creating a new program or buying major equipment. The idea is to prevent duplication, which can cost you money in higher health care costs, while making sure communities have the health care options they need.

Now, with no money to run the program, DHEC doesn't know what to do. So it filed a lawsuit asking the state Supreme Court for guidance.

“As a state agency, our only authority comes from state law. Our legal staff worked hard last week to determine our options, and we were left with only one that complies with the law,” DHEC Director Catherine Templeton said.   “We are optimistic this action will give South Carolina businesses the same confidence to move forward.”

In her veto message, Gov. Haley wrote, “The Certificate of Need program is an intensely political one through which bureaucratic policymakers deny new healthcare providers from offering treatment. We should allow the market to work rather than politics.”

State Dept. of Health and Human Services director Tony Keck says the CON program ends up costing you money. “There's lots of evidence that CON laws are used to block competition. Instead of controlling costs, it's really driving costs up because of lack of competition,” he says.

But South Carolina Hospital Association senior vice president James Walker, Jr., says the CON program actually saves you money. In states that have ended their CON programs, “You had unnecessary duplication and somebody has to pay for that. That meant then the health care costs, mainly of insurance, but also for anybody accessing services, that cost kept growing and growing.” He says 35 states have CON programs.

George Zara, president and CEO of Providence Hospital in Columbia, says he saw the difference first-hand when he worked in Colorado, which did not have a Certificate of Need Program. He says the governor's argument that the free market will drive down costs sounds good, in theory, but didn't work in reality.

“When the economy slowed up, you had tons of companies go bankrupt, turn their backs on programs and services they brought to communities because the economic model had overcapacity and it didn't work,” he says. “The Certificate of Need program assures that there's some balance between what the needs of the community are and appropriate use of resource to serve those needs.”


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