Investigative Report: Mission Hospital/Blue Cross Impasse Reflects Problems with NC CON Laws


I have to admit it – I am a self-professed “picker,” an antique and thrift store junkie. After quickly inspecting the dew-soaked mirror, I walked home, got in my Suburban and went back to fetch the prize. It now hangs proudly at the end of my hallway.

But this got me to thinking about mirrors – how they reflect light and can make a room, or hallway look bigger. Isn’t this what exposing the truth is about? Allowing light to expose or reflect the truth on a situation brings it to a larger audience.

Clearly, Mission Health and Blue Cross/Blue Shield have reached an impasse and neither will budge. One wants higher prices and the other wants to keep costs down. How did this happen? Let’s use our mirror to reflect some light on this multi-faceted issue.

In North Carolina, we face the dire consequences of a little known class of laws – the Certificate of Need or CON laws.

CON law restrictions come in addition to state licensing and training requirements for medical professionals. They require that all medical providers wanting to build or expand an existing health care facility, offer new services, or acquire new medical equipment must first gain approval from state regulators.

North Carolina’s 25 CON laws limit health care competition – driving up prices and lowering the quality of care. We’ve created a monster of hospital monoliths, complicated by the Affordable Care Act which has narrowed the competition among health insurers. These state CON laws go hand-in-hand with the federal Affordable Care Act, helping to create the impasse: As a “monopoly” Mission Hospital wants to be able to raise prices but “monopoly” Blue Cross/Blue Shield wants to keep costs down and won’t budge on a 0% increase for the coming year.

The Mission and Blue Cross impasse is a mirror reflecting the effects of North Carolina CON laws, further complicated by the Affordable Care Act. These laws created the Mission Hospital “monopoly” in Buncombe County. Usually the monopolist can control the market price. In this unusual situation, two “monopolies” – Mission and BC/BS – go head to head.

According to recent findings by The Mercatus Center, North Carolina is one of 32 states with four or more CON regulations. Health-care providers cannot open or expand facilities, or buy certain equipment unless they undergo a time-consuming, rigorous application process. Existing health-care providers get to decide whether they need competition. Instead of preserving hospital services in rural communities, CON laws are limiting competition and important services, like labor and delivery, are being eliminated in western NC communities like Brevard. The laws are having the opposite effect of what was intended.

Let’s look at some statistics. In July, Mission gave notice that it would terminate its contract with BC/BS on October 5, 2017. The reason? They say they can’t provide health care services without a price increase. According to Mission Health’s website, they “serve a higher population of patients insured by Medicare or Medicaid that reimburse us below costs; and we also serve a higher volume of uninsured patients than most health systems.” Essentially, the government “doesn’t pay enough,” so Mission needs to make money on the rest of us who have private insurance.

Let’s rewind to the state legislature’s June budget session. The NC Senate included a gradual repeal of the state CON laws in their version of the biennial (every two years) budget. But when the state House merged their budget to come up with the final version, the CON law repeal had vanished. Since then, Representative Chuck McGrady said in an email he would be “open to changing NC’s CON law. Whatever change might occur, though, should be done incrementally, so that health care organizations (hospitals, hospices, assisted living facilities, etc.) can plan for the changes. In other words, we can’t move from where we are without allowing various health providers the ability to adapt to new rules.”

But time is running out for health care consumers. And not only because death rates are higher in states with CON laws. Western North Carolina BC/BS customers will have to find alternative providers on Oct. 5th. The North Carolina legislature needs to act soon to repeal or phase-out our self-destructive CON laws. The mirror doesn’t lie.

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