Commentary: Before reform, a plan is needed

Without one, deregulation of a state law risks destabilizing health care system
Mark H. Merrill

Mark H. Merrill

Virginia’s Certificate of Public Need law protects and ensures all Virginians’ access to essential and high-value health care.

The core of the law is the recognition that many preconditions for an effective marketplace just don’t exist for health care; the fact is health care is a unique service. Name one other “free market” where service providers are required to provide service for free to large numbers of customers and accept payment that is more than 30 percent below costs, if any payment at all. Yet that is what hospitals are asked to do.
It is our obligation and we take great pride in that.

In 2013, Virginia’s hospitals provided over $628 million in charity care, enabling some of Virginia’s most needy to get valuable access to health care, and Virginia absorbed more than $339 million in Medicaid shortfall. In addition, cuts to Virginia health care providers imposed by the Affordable Care Act, sequestration under the Budget Control Act of 2011 and the American Taxpayer Relief Act from 2013-2016 are estimated to be almost $1.4 billion. One third of Virginia’s hospitals operated in the red last year, and bond rating agencies are forecasting an even bleaker 2015 outlook.

Valley Health is a nonprofit health care organization serving the health care needs of people in and around the top of Virginia, and parts of West Virginia and Maryland. Valley Health was incorporated Nov. 4, 1994 after Winchester Medical Center and Warren Memorial Hospital, in Front Royal, had partnered to serve the region. Headquartered in Winchester, Valley Health now operates six hospitals: Winchester Medical Center, Warren Memorial Hospital, Shenandoah Memorial Hospital in Woodstock, Page Memorial Hospital in Luray, Hampshire Memorial Hospital in Romney, West Virginia, and War Memorial Hospital in Berkeley Springs, West Virginia.

Last year, Valley Health hospitals provided more than $150 million in community benefit, charity care, and unreimbursed costs of care to the communities we serve.

The Certificate of Public Need law is important to all Virginians because it ensures:

• Access to care for the uninsured and less fortunate
• Availability of essential health services for everyone
• Readiness for public health and disaster care needs
• Training the future health care workforce
• Quality of care oversight and accountability of all health care providers so consumers know they can trust the health care that they receive

In 2000, the Virginia General Assembly passed a bipartisan law to responsibly deregulate the Certificate of Public Need law. As necessary pre-conditions for phasing out the law, certain protections were put in place to ensure access to essential services, health professions training, disaster preparedness, safety net health care, quality of care oversight and accountability and market fairness. Unfortunately, a lack of funding to address these necessary pre-conditions put the deregulation plan on hold.

The need to ensure access to essential health care services and provision of indigent care is even more critical in Virginia today. Regardless of one’s opinion about the Affordable Care Act, if Virginia joined other states in implementing our own approach to covering the uninsured, and closing the coverage gap, an estimated 250,000 more Virginians would receive coverage, access to health care, and one of the most critical requirements for an effective health care marketplace could be largely addressed. However, in the absence of a path forward on coverage expansion, Certificate of Public Need law deregulation risks destabilizing an already fragile health care system and jeopardizes the ability of all Virginians to receive access to vital health care services. Further, it is imperative that Virginians know the health care they are receiving is safe and well regulated to ensure their own personal health and well-being.

All of this is why any conversation about reforming or eliminating Virginia’s Certificate of Public Need law must start with a comprehensive, responsible plan that takes into account the need to protect the ability of all Virginians to receive access to essential health care services, including our most vulnerable citizens, while also ensuring that when we access that health care it is safe, well-regulated and of the highest quality.

Mark H. Merrill is president and CEO of Valley Health System.

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