Alaska's Healthcare System Under Fire: Group Seeks Overhaul of Certificate of Need Program

Strategic Insights -

Alaskans for Medical Choice and Competition has filed a lawsuit against the state, arguing that the current system for managing healthcare services restricts consumer choice and contributes to rising healthcare costs. The group, led by former state commerce commissioner Paul Fuhs, claims that the certificate of need program is unfair, unnecessary, and poorly run. The lawsuit seeks to do away with the system, which requires government approval for new health services, and replace it with a more market-driven approach.

Key Takeaways:

  • The certificate of need program in Alaska requires government approval for new health services, including medical imaging equipment and psychiatric treatment centers.
  • The program is intended to control health costs by preventing excessive or duplicated services, but proponents argue that it restricts consumer choice and contributes to rising healthcare costs.
  • The lawsuit, filed by Alaskans for Medical Choice and Competition, names as defendants Joel Gilbertson, commissioner of health and social services, and the parent corporation for Providence Alaska Medical Center.
  • The group argues that the market should govern what health services are added, pointing to a July report by the Federal Trade Commission and the U.S. Department of Justice that urges states to reconsider their certificate of need programs.
  • According to the report, certificate of need programs are not successful in containing healthcare costs and pose serious anticompetitive risks.
  • Despite concerns about the Alaska program, 36 states still use a certificate of need system, and even those that don't have some way to manage the growth of new healthcare services.

Statistics:

  • 36 states use a certificate of need system.
  • Projects costing more than $1 million in Alaska must receive a certificate of need, or CON.
  • The certificate of need program in Alaska has been in place since 2004.
  • The lawsuit alleges that the approval process is biased against competitors, allowing incumbents to use the process to forestall competitors from entering a market.
  • An MRI unit costing $4.7 million was approved by the state for a 2,000-square-foot addition at Providence Alaska Medical Center on September 2.

Sources:

  • "The Agencies believe that, on balance, CON programs are not successful in containing healthcare costs, and that they pose serious anticompetitive risks that usually outweigh their purported economic benefits. Market incumbents can too easily use CON procedures to forestall competitors from entering an incumbent's market," the report by the Federal Trade Commission and the U.S. Department of Justice (July 2005).
  • "It restricts consumers' choices on where they can go and it contributes to rising healthcare costs," Fuhs said in an interview (Source: NewsRx.com & NewsRx.net, 2005).
  • "The state supports the certificate system but agrees the particulars of the Alaska program need work," Sherry Hill, spokeswoman for the state Department of Health and Social Services (Source: NewsRx.com & NewsRx.net, 2005).