A state appeals court ruling against CaroMont Health this month stands to create more competition among providers of a popular medical procedure, though it’s unclear what that will mean for patient costs.
CaroMont Endoscopy Center in Belmont has been the only outpatient clinic of its kind in Gaston County since it opened in January. When the state granted permission for a competing clinic to open in Gastonia in 2011, CaroMont Health — which operates CaroMont Regional Medical Center — began fighting that decision in court.
The N.C. Court of Appeals, which heard the case in February, ruled in the state’s favor Tuesday. That could pave the way for five local physicians to open Greater Gaston Center, a proposed outpatient surgical clinic with two gastrointestinal endoscopy rooms, at 924 Cox Road in Gastonia.
The physicians — Dr. Sam Drake, Dr. William Watkins, Dr. Khaled Elraie, Dr. Nelson Forbes and Dr. Austin Osemeka — petitioned to open their clinic in October 2010. The N.C. Department of Health and Human Services approved the request, reasoning it would not duplicate services and would be a valuable addition to the community.
At the time, CaroMont had already obtained state permission to open its own endoscopy center locally, but had yet to act on it. It contested the new clinic in part because four of the five gastroenterologists are employed at CaroMont Regional Medical Center and would likely refer some of their patients to their own endoscopy center.
The N.C. Court of Appeals struck down CaroMont’s claims. The judges wrote that CaroMont has no right to patients who have yet to schedule a procedure.
“CaroMont witnesses admitted that physicians have the right to practice medicine where they desire and patients have the right to be treated where they wish,” the judges wrote in their summary.
Raleigh attorney Todd Hemphill, who is representing CaroMont Health in the dispute, said he hadn’t had a chance to speak with his client following Tuesday’s ruling and couldn’t say whether another appeal is possible.
Good or bad for the state?
Endoscopies have become increasingly common procedures for diagnosing colorectal cancer, the third most common cancer found in men and women in the United States. The American Cancer Society estimates 143,000 people will be diagnosed with the disease each year for the foreseeable future.
Physicians in North Carolina may open gastrointestinal endoscopy rooms in their practice without a special state certification. But Medicaid and Medicare typically don’t provide reimbursement for such procedures at an unlicensed facility.
To be licensed as an outpatient surgical clinic, providers must secure a “certificate of need” from the state. The requirement, in place since 1978, is meant to keep health-care costs low. It bars physicians from unnecessarily duplicating services. Offering too much of the same service could lead to health-care providers purchasing expensive but unnecessary equipment, and then over-prescribing its use.
Depending on who you talk to, the state’s method for keeping costs down has or hasn’t been successful.
William Brandon, a professor of public policy on health at UNC Charlotte, said the state’s system is far from a well-oiled machine.
“I think trying to have a mechanism to avoid unnecessary duplication of services is a really good idea,” he said. “But the way it’s carried out in North Carolina and South Carolina, it appears to be used principally as a vehicle for one established health-care entity to frustrate the aims and business plan of a competitor.”
Brandon said the certification process often leads to multi-year court battles that prevent communities from getting the services they need, as competing providers “lawyer up.” That occurred over the last few years when CaroMont Health fought a Charlotte rival over the right to build a new emergency department and outpatient hospital in Mount Holly.
“If we don’t abolish it, we need to at least try to make it more efficient,” Brandon said of the current system.
Thomas Ricketts, a UNC Chapel Hill professor and an authority on health-care policy, agreed North Carolina has one of the toughest certificate-of-need laws in the country. That’s at least helped prevent the state from seeing unpredictability or instability in health care, he said.
“There are a number of reasons North Carolina has stuck with it,” he said. “I think it’s largely to protect against disruption in the market.”
Ricketts disclosed that his wife, an attorney, previously concentrated on the certificate-of-need issue in Raleigh, but said he’s ambivalent about the benefits of the law. He believes it has led to some marginal cost savings, but there are no “super strong” arguments about its success in keeping costs down, nor in keeping quality high, he said.
“I also hear that out-and-out competition in health care raises costs,” he said. “You don’t compete on price. You compete on quality, and quality costs more.
“Tying that to the benefits of the CON has not been as easy as it should be.”
You can reach Michael Barrett at 704-869-1826 or twitter.com/GazetteMike.