Healthcare regulation, too much and often wrong

There are literally hundreds of governmental and non-governmental regulatory and licensing agencies which oversee every possible aspect of healthcare: NCQA, FDA, CDC, EPA, CREF, AMA, AAMC, OCR, CMS, OSHA, IOM.  These are but a few of their acronyms, but you get the point.

The unstated working assumption related to regulatory activities in healthcare is that once all healthcare providers are doing everything precisely the same way we will have perfect care, exceptional quality and the lowest cost.

Of course, nothing could be further from the truth.  Regulation and regulators exist, ultimately, to advance their own purposes.  In many ways the regulatory process is an inhibition to creative competition and at worse, a threat to the safety of our patients.

Allow me to offer two examples to make my case, the first with respect to healthy competition and the second with regard to patient safety.

Their original intention of Certificate of Need (CON) laws was to control the increase in the supply of medical facilities in the country.  New York was the first State in 1964 to establish the State government power to determine whether there was a need for any new hospital or nursing home.  In 1974, the Federal government tied Medicare funding to CON programs.  A Federal act required all 50 states to create structures which, ultimately, have controlled the growth of healthcare facilities.  The CON programs diversified to control approval of clinical programs and often times they limited any capital expenditures over a certain specified amount.

The Federal CON mandate was repealed in 1987, 31 years ago.  In the intervening years healthcare has moved toward more open competition and consumer responsiveness with respect to access, quality and price.  However, only 14 states have ended their CON programs.  Thirty-seven states and the District of Columbia currently maintain some level of CON or similar regulation.  Health systems that have a new hospital or an existing approval for a sought after clinical program (e.g., open heart surgery) are often in favor of the maintenance of CON.  It restricts others from competing.

The CON program is the antithesis of a competitive market place where the best ideas may be implemented quickly, costs can be cut and care can be provided in innovative ways.  The CON process can add two to three years to development of a facility or a clinical program, effectively rendering the original assumptions on which it was planned invalid because the market changes so dramatically during the process period.

Patient safety can also be compromised by regulation.  The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is a tax exempt organization which accredits more than 21,000 US healthcare organizations.  It establishes standards, reviews compliance and offers corrective plans.  The standards controlled by JCAHO have grown from facility design and cleanliness to extraordinary lists covering all dimensions of patient care.  Though well intended, the impact of JCAHO on the opioid crisis is an object lesson in regulation gone wrong.

Years ago JCAHO began a program of critiquing patient care by physicians and hospitals with respect to self-reported "pain" by patients. The inherent presumption of this work by JCAHO was that patients should not experience pain. This standard represented fatally flawed logic.  Examining pain at moderate levels is a critical indication of the disease process.    Nonetheless, when pain was reported by patients, JCAHO criticized hospitals and physicians and demanded corrective action.

The response from the medical community was universal, "no problem, we can eliminate pain".  So, before subsequent reviews by JCAHO, many hospitals and physicians moved to substantially increase the use of opioids to reduce pain in their patients.  Problem solved.  Patients no longer reported pain.  However, more patients became dependent on opioids.  While JCAHO accreditation was not the only source of this growing problem, it was an institutionalized policy that drove a significant portion of the over ordering practices by doctors and hospitals ending in addiction and a national crisis.

The point is not that we should operate healthcare without regulations.  Rather regulation needs to be scrutinized closely and regularly.  Left alone regulators will not alter regulations that harm healthcare business performance and patient care.

Howard Peterson, MHA is the founder and managing partner of TRG Healthcare and a member of the Inquirer's Health Advisory Panel.