Cline: State Laws Have Limited The Supply Of New Hospital Beds For Decades

By Andrew Cline, NH Journal

New Hampshire is scrambling to find enough staffed hospital beds to handle the current surge in COVID-19 patients. Suddenly, politicians on the left and the right are deeply concerned about the low number of hospital beds in the state. Which is kind of maddening because they’re the ones who created the shortage in the first place.

For decades, state laws have severely restricted the state’s hospital capacity. They still do.

Before 2016, New Hampshire was one of many states with a Certificate of Need (CON) law that essentially required businesses to prove that a large medical equipment or facility investment was needed before it could be approved by the state. That law suppressed investment in new facilities and services.

In 2016, the CON law was repealed, but it was replaced with laws that created additional restrictions on hospital capacity. Senate Bill 481, passed that year, added three major requirements into state law that restrict hospital competition.

1. RSA 151:2-g mandates that every hospital “shall operate an emergency department offering emergency services to all individuals regardless of ability to pay 24 hours every day, 7 days a week.” This law prohibits the creation of any competing hospital services that don’t also include a 24/7 emergency room. Conveniently, this law “shall not apply to any hospital licensed and operating prior to July 1, 2016, which does not operate an emergency department.” Incumbent hospitals are protected from this anti-competitive law.
2. RSA 151:4-a prohibits the establishment of any “ambulatory surgical center, emergency medical care center, hospital, birthing center, drop-in or walk-in care center, dialysis center, or special health care service” within 15 miles of an existing critical access hospital if the new facility “will have a material adverse impact” on the incumbent hospital. That is, if it would hurt the hospital’s business, it is prohibited from state licensure. A 15-mile radius might sound small, but it equals 706.9 square miles.
3. RSA 151:2-f mandates that every hospital, infirmary, “outpatient rehabilitation clinic, ambulatory surgical center, hospice, emergency medical care center, drop-in or walk-in care center, dialysis center, birthing center, or other entity where health care associated with illness, injury, deformity, infirmity, or other physical disability is provided” accept all forms of payment. This law mandates that medical facilities accept Medicare, Medicaid and private insurance — which means that it bans any facility designed to cut costs by accepting only cash payment. This inflates the cost of services and eliminates competition.

In addition, RSA 151:2 VI (a.) imposes a moratorium on new beds for nursing and rehab facilities. It states that “there shall be no increase in licensed capacity of, any nursing home, skilled nursing facility, intermediate care facility, or rehabilitation facility, including rehabilitation hospitals and facilities offering comprehensive rehabilitation services.”

State laws ensure that it is much easier for incumbent hospitals and other medical facilities to expand than for new competitors to enter the New Hampshire market. The results are exactly what one would expect.

Since 1980, New Hampshire’s population has increased by 49.6%. But in that time, only one new acute care hospital, Parkland Medical Center in Derry, has been built, Greg Moore, state director of Americans for Prosperity-NH has pointed out.

The current COVID-induced crunch on hospital capacity has many causes. The media have reported, accurately, that a surge in patients combined with a staffing shortage has put severe strain on the system.

But that system entered the COVID-19 pandemic with a capacity already artificially constrained by anti-competitive state laws. Going forward, politicians who insist that New Hampshire needs to improve its hospital bed capacity can start by removing unnecessary barriers that make it extremely difficult for new competitors to enter the New Hampshire market.

Drew Cline is President of the Josiah Bartlett Center for Public Policy, a New Hampshire-based free-market think tank.

This story was originally published by the NH Journal, an online news publication dedicated to providing fair, unbiased reporting on, and analysis of, political news of interest to New Hampshire. For more stories from the NH Journal, visit NHJournal.com.