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From Health Law Daily, January 6, 2014

Health care expansion continues after veto of South Carolina’s certificate of need program

By Melissa Skinner, JD

Despite Governor Nikki Haley’s veto of South Carolina’s certificate of need (CON) program in 2013, 69 health care expansion projects are moving forward without state approval. Before the veto, these expansions would have required approval by South Carolina’s Department of Health and Environmental Control (DHEC). Yet, since Gov. Haley’s veto of the appropriations bill for the CON program, which requires state approval for new hospitals as well as the expansion of existing hospitals, DHEC suspended the program and many projects have continued to progress without the confirmation of the state. In turn, a group of hospitals and nursing homes in South Carolina have brought suit against the DHEC seeking clarity and reinstatement of the program. It is predicted that this battle over the CON program will be a key issue when the South Carolina legislature reconvenes in mid-January.

CON explained. South Carolina is one of 36 states that maintain a CON program, which is meant to restrict the growth of medical services so that every state resident has access to necessary medical care. According to the South Carolina Hospital Association (SCHA), the CON program also helps control costs of health care by limiting capital investments while at the same time ensuring safe and quality care. As the SCHA states, “[w]ithout CON, entrepreneurs could build and offer any type of services to those willing to pay. This approach would seriously endanger access to services for those who cannot pay.”

The CON debate. Gov. Haley has vetoed the CON program in every year of her term and, in 2013, the South Carolina house upheld her appropriations veto. As a result, the CON program is still law in the state but has no funds appropriated to support its implementation. While some health care providers have taken advantage of the resulting confusion and moved forward with projects without the required state approval, other hospitals and nursing homes have asked the Supreme Court to force DHEC to reinstate the program, arguing that a one year budget veto cannot repeal a state law. Despite reported numbers of the continuation of projects without approval subsequent to the veto, according to the SCHA, 45 percent of its member health care providers that responded to a recent survey reported delayed planned capital projects as a result of the veto. The survey revealed that this delay amounted to $60 million in project costs being put on hold.

Although the SCHA concedes that that the CON program is not “a perfect process,” they claim that the delays caused by the confusion around the approval process subsequent to the veto will also result in a decline in quality of care. While the SCHA argues for a reinstatement of the CON program, it also supports South Carolina Senate Majority Leader Harvey Peeler’s proposed bill to reform the CON program.

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