CON Laws Hurt The Most Vulnerable

by David Flemming

Brookside Health and Rehabilitation Center, a nursing home in White River Junction is set to close, leaving 33 seniors in the lurch. The nursing home’s owners made the decision after the government agencies in charge of Medicare and Medicaid announced plans to stop making payments to Brookside after Brookside failed to act on health and safety violations. This has prompted Vermont regulators to discuss the possibility of making the CON process stricter in the hopes of improving healthcare for seniors. Kevin Mullin, head of the Green Mountain Care Board, lamented that the GMCB doesn’t “have any follow-up” with a nursing home, once the GMCB issues a CON. If the GMCB really wants to serve the interests of Vermont’s seniors, they should consider repealing the Certificate of Need process altogether.

Assuming that the accusations that Brookside was not living up to quality standards are valid, Vermont’s CON laws actually enabled the decline in service. According to 2015 research, CON laws “protect nursing homes from new entrant competition.” In other words, CON effectively prevented a competitor from entering the marketplace that might have offered higher quality care. Such competition could have given residents a better alternative, and/or incentivized Brookside to do a better job or lose customers.

Now, because of the CON process, it will be a long time before a new nursing home can step up to fill the gap created by Brookside’s closing. Each nursing home must go through a costly process to build a CON application, and then wait several months to get a decision. In the meantime, nursing homes providing poor quality care have license to operate, with less fear of impending competition.

To add insult to injury, nursing homes in CON states exhibit worse performance than nursing homes in non-CON states. “Nursing homes in those states without a CON and/or construction moratorium policy have more registered and licensed practical nurse hours per resident day (than states with a nursing home CON).” Seniors living in a non-CON state are able to get more better attention in a nursing home than those living in CON states like Vermont.

For many seniors, the idea of living in a nursing home regardless of its quality, is an unappealing one. According to a 2015 poll, “66% (of seniors) claim they would prefer to die before they would live in a nursing home.” Clearly, nursing homes should be a last resort for most seniors.

Unfortunately Vermont’s CON laws have increased the cost for seniors who would like to receive care at home, effectively forcing seniors into nursing homes. According to Mark Botti, Chief of Litigation for U.S. Department of Justice, Vermont’s home health agencies have used CON laws to create “territorial market allocations,” divvying up Vermont into “exclusive geographic markets” that prevent competitive entry into the marketplace for healthcare. The Department of Justice’s research “found that Vermont consumers were paying higher prices than were consumers in states where home health agencies competed against each other.” Seniors are forced into nursing homes at a higher rate, because these nursing homes look relatively inexpensive compared to the monopolized home health agencies.

CON laws have distorted the prices of nursing homes and home health care, leading seniors to choose nursing homes of poor quality. Only by repealing CON laws can we give seniors the choice of high quality nursing homes or home based healthcare.

David Flemming is a policy analyst for the Ethan Allen Institute

{ 1 comment… read it below or add one }

John goodrich November 11, 2017 at 12:20 am

I hope that this piece, like so many from Ethan Allen Institute, appears in Vermont’s newspapers with the query, what is the Vermont government’s answer to the charge that it is actually causing a 30-bed nursing home shortage in Windsor County…

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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