If states eliminate CON laws, here's what it could mean — Kaufman Strategic Advisors' Nate Kaufman explains

Written by Eric Oliver | December 11, 2018 | Print  |

The Trump administration released a healthcare proposal aimed at drastically reducing healthcare costs.

Kaufman Strategic Advisors Managing Director Nate Kaufman offered Becker's ASC Review his perspective on the proposal to eliminate or drastically reduce certificate-of-need laws, as well as its potential effects. 

Question: If states repeal their CON laws in response to the Trump administration's proposal, what would that mean for competition?

Nate Kaufman: Clearly, competition would increase. CON [laws are] currently constraining the capacity of ASCs. If the administration's recommendation are adopted, we would see the number of ASCs increase and the capacity of existing ASCs increase.

Q: How could surgery centers and HOPDs benefit from the repeal?

NK: The impact on hospitals depending on HOPD rates would be significant. As we have seen in imaging, when ASC capacity increases, the commercial insurers will insist that surgeries be diverted from HOPD facilities to those with community-based fee schedules. This [would come] at a time [when] hip and knee replacements — some of the most frequently performed procedures — are moving to the outpatient setting.

Q: Could there be any drawbacks to essentially deregulating the market?

NK: Many hospitals have depended on HOPD profits to subsidize their inpatient services and employed physicians. If hospitals have not become relevant in the outpatient surgery and imaging space and they lose outpatient HOPD surgeries, they will experience significant financial distress. These include hospitals without tertiary services, such as rural small community hospitals and academic medical centers. Their only relief will be their ability to negotiate waivers from the commercial insurance companies

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