Policies that Fail
This is David Henderson, reviewing David Dranove's book Code Red in Regulation.
On Certificate of Need Laws:
Illinois hospitals today are located where Illinoisians lived in the 1950s, and the hospitals that received Hill Burton licenses (at that time) dictate which of today's growing suburbs get to have local hospital services.
On Pay for Performance:
P4P is not payment for outcomes. Rather, it is almost entirely about paying doctors and hospitals for following various processes, in the hope that those processes will lead to better outcomes. Dranove also points out some unintended consequences of P4P. In England, he notes, doctors are rewarded for scheduling appointments on short notice. The unintended but entirely predictable response is that some doctors "refuse to schedule appointments more than two or three days in advance.
On P4P Over the Top:
After Britain's Labour government decreed that hospitals must treat patients within four hours of their entering the building, hospitals started…having patients wait in ambulances outside the hospital so that they would not violate the four-hour rule.
The notion that Certificate of Need Laws save money by limiting unneeded excess capacity has long been discredited. However, it’s no surprise that large, established hospital systems fight against repeal of CON laws in order to limit competition by new firms entering the market. In an interesting article, The Wall Street Journal explains how many non-profit hospitals are earning monopoly profits due to market power. http://online.wsj.com/article/SB121986172394776997.html?mod=2_1566_topbox
What kills me about CON laws is that even the federal government figured out they were bad news and repealed them more than two decades ago. Yet many states still cling them.
BTW, one of Sarah Palin’s first initiatives after becoming governor of Alaska was the introduction of the “Alaska Health Care Transparency Act,” which included a provision repealing their CON statute.