Connecticut’s healthcare markets are consolidating at a serious clip and it’s endangering access to care and driving up healthcare prices that make care unaffordable. Unfortunately, the state agency that is supposed to keep Connecticut’s healthcare market competitive isn’t acting. They have the tools – Connecticut has among the most protective laws in the nation. But state regulators are not using them to hold big health systems accountable, and we are all paying the price.
When hospitals and practices merge into large health systems, insurers and employers have fewer or no alternatives and the systems can name their price. Connecticut’s healthcare markets are among the most consolidated in the US. And the rate of Connecticut practices joining large health systems is growing. There is ample evidence that consolidation of healthcare providers into larger health systems raises prices, doesn’t improve quality, and reduces access to care.
The main regulator that should protect healthcare market competition in Connecticut is the state’s Certificate of Need (CON) process. Healthcare facilities and systems that want to expand or limit services must get permission through the CON process, run by the Office of Health Strategy (OHS). The CON process is supposed to “improve access to and quality of health care services and contain costs by fostering a competitive environment in the health care market.” However, they seem more interested in approving CON applications. From July 2016 through last August, of 74 CON decisions, OHS approved all but three. That’s not regulation, that’s a rubber stamp.
A study published this month in Health Affairs, finds that Connecticut is among the three states with the most robust CON laws. However, market concentration in states with robust laws like ours grew just as fast as the rest of the nation between 2010 and 2019. In addition, healthcare prices are 28% higher in states with robust laws and have risen just as fast as the rest of the nation. The problem is that regulators haven’t used the legal tools available to attach conditions to mergers that preserve competition.
Unfortunately, OHS is not proactive in preserving critical services and even the conditions OHS places on CON approvals are not enforced. In a classic conflict of interest, OHS usually allows hospital systems to choose their own monitors to oversee compliance with conditions of CON approvals. I don’t let my students grade their own exams.
Recent closures of birthing centers in rural areas of the state highlight the weakness of OHS regulation. Financial pressures are often cited as reasons for closing birthing units. Windham Hospital, part of the Hartford HealthCare, has been winding down their birthing center for years. One in four Windham residents lives below the poverty level and 82% of Windham’s OB/Gyn patients are on Medicaid, which pays lower rates. In 2019, when Sharon Hospital joined Nuvance Health, they promised OHS that they would continue to provide maternity and obstetrics services for five years, but two years later they are ending that care for financial reasons. Last year, Johnson Memorial Hospital in Stafford, part of Trinity Health of New England, closed their birthing unit without applying for a CON as required by law. OHS is looking into it. There are reports that women in labor from rural communities have given birth on the road traveling to distant hospitals.
Ineffective state regulation of Connecticut’s healthcare system is not a new problem. In 2016, the Malloy administration created a taskforce to study how to make the CON process preserve competition. After eight months of deliberation by a committee, members recommended changes to state laws that redirected the CON’s focus onto keeping Connecticut’s healthcare markets competitive. In 2017, the legislature passed those recommendations. Unfortunately, OHS won’t use the tools to keep markets competitive and preserve critical community services.
Hospitals should be centers of care for communities, not a collection of profit centers. Regulators need to mean what they say and hold regulated industries accountable. OHS needs to be brave, risk the displeasure of a powerful industry, and use the tools available to keep healthcare available and affordable.