Florida may stop approving new hospital beds. Will that mean unequal access for rich and poor?

TALLAHASSEE — When someone wants to build a hospital or nursing home in Florida or add beds in an existing facility, the state has to agree that their community has a need for expanded health care.

It's a regulation meant to ensure that poor and rich communities alike have equal access to hospitals, hospices and other health facilities. But at $10,000 to $50,000 per facility application, it's also costly and can lead to lengthy, and much pricier, lawsuits.

For years, Republican state lawmakers have worked to repeal the regulation — known by the three-letters CON, or certificate of need — which they say is anticompetitive and inefficient. This year, the political environment in Tallahassee may finally allow them to do so.

A proposal to gut the rules won support this week from a Florida House panel, the Senate is pushing a similar proposal and Gov. Rick Scott identified it as a top priority for the upcoming legislative session.

"We've got an outdated certificate-of-need process," Scott, a former hospital executive, said. "(Ending it) would help improve quality. It'd also control price and increase access."

The Senate shot down a repeal effort last year, but dramatic turnover has improved its prospects. Of the chamber's 40 members, 20 are new this year, and many voted to repeal CON as House members last year.

While pro-repeal Republicans argue the rules limit competition, they face opposition from influential health care interests, which have a foothold in virtually every legislative district in the state.

Hospitals and nursing homes say ending limits on the number of beds they can build in a particular area could make it harder for patients in poor or rural areas to find good-quality care. Their doomsday scenario: Without having to ask the state for permission to build, companies would be drawn to wealthier areas where more of the patients have private insurance plans that pay hospitals more than Medicaid.

"Repealing CON could create a two-tiered health system in Florida," said Clint Shouppe, a lobbyist who represents BayCare Health System. "One for patients with good-quality insurance and one for Medicaid and charity care patients."

Hospitals offset the costs of charity care patients and low Medicaid rates with patients who have private insurance. And Shouppe said he worries new hospitals could open intending to treat only those whose health plans can pay full price.

They have another motivation: Forcing new hospitals to go through a lengthy approval process with the state helps to limit competition. And Sen. Rob Bradley, R-Fleming Island, who is sponsoring the Senate proposal, says competition is exactly what the health care industry needs to fight rising costs.

"You have to be prepared for a new day in health care," Bradley said. "We can be a leader in free-market approaches to health care delivery. An important part of that is making sure that if a market can support competition, that we don't have unnecessary regulations in place to prevent that competition."

Florida is not the first state to consider ending CON, which dates back to a federal law that has since been repealed. In all, 13 states have taken the regulations off their books.

In hospitals, the effect has been minor. States with the restrictions have just 13 percent fewer hospital beds than those without the restrictions.

Bradley and House sponsor Rep. Alex Miller, R-Sarasota, say extra licensing requirements in their bill help mitigate concerns that quality would decrease.

But nursing homes and hospices have presented more of a challenge in other states. Operators of Florida homes fear that an explosion of new facilities could lead to unfilled beds and not enough money to provide quality care.

Each unfilled bed means lost revenue. And lost revenue, according to the Florida Health Care Association, leads to deteriorating and understaffed facilities, especially those that serve Medicare and Medicaid patients for whom the homes' payouts are much lower.

In 2015, Indiana state lawmakers were forced to pass a moratorium on new nursing home construction after too many facilities opened in the wake of that state repealing its CON laws.

Even some Republicans who support repealing regulations have expressed concerns that nursing homes could cause a problem.

"I believe what we have here is a bill that is very well intended and will work indeed for hospitals, but it doesn't appear to me that there is any evidence in record that it will work for nursing homes or hospices," said Rep. Shawn Harrison, R-Tampa. "We need to be very careful with how we deal with our most elderly and frail."

Times/Herald staff writer Jeremy Wallace contributed to this report. Contact Michael Auslen at mauslen@tampabay.com. Follow @MichaelAuslen.