State Deregulation of Open-heart Surgery

Photo: Surgery

Deregulation of the health system
can lower the cost of patient care;
© Yeulet

Originally, the Certificate of Need is designed to prevent hospitals that do not treat a minimum prescribed volume of patients from offering open-heart surgery. However, the study under the lead authorship of Vivian Ho, chair in health economics at Rice University's Baker Institute for Public Policy, found that deregulation is beneficial to patients in two ways.

On the one hand, Ho said that states that removed Certificate of Need regulations for open-heart surgery did not experience a change in patient mortality. On the other hand, the cost of patient care decreased by 4 per cent after deregulation. Ho gives this as a reason that she is “doubtful of the value of these regulations”.

Deregulation led to more hospitals building new facilities to perform open-heart surgery, which raised costs directly. However, deregulation also encouraged competition between hospitals to deliver higher quality care. "The desire to attract more patients in a competitive market leads hospitals to offer higher quality care," Ho said. "It may sound counterintuitive, but recent studies show that higher quality surgery lowers costs because costly hospital complications are avoided when one improves care." Thus, the cost savings from lowering average costs per patient outweighed the additional costs of new facilities built.

Ho believes that the results should serve as a lesson to policymakers as they consider the future of Certificate of Need regulations as well as other regulations of the health care system.

Currently 25 states maintain Certificate of Need regulations for open-heart surgery, including Georgia, Maryland, New York and Washington. Ho's study evaluated bypass surgery patients in 34 states, seven of which removed Certificate of Need regulations during her study period between 1991 and 2002. Only two more states have deregulated open-heart surgery since then.; Source: Rice University