Delaware Health Resources Board is root cause of high healthcare costs

August 27, 2019

I believe you have to rethink your editorial opinion of Aug. 20 in support of the decision of the Delaware Health Resources Board in denying Beebe’s application for an emergency department in the Georgetown area.

Bayhealth withdrew its application in a tactical ploy so as not to have it rejected, and they could reapply instead of having to go through the bureaucratic nightmare of the appeal process.

Apart from the factual justification for the need for these services which the hospital applicants provide in their applications, the reasoning behind the board’s denial and your editorial is that the emergency department costs are very high and some patients use them when lower-cost venues like walk-in clinics or primary care doctor’s offices are available.

This is a national problem since those people who show up at emergency rooms for minor heath issues often don’t have health insurance, don’t have a primary care doctor, are recent immigrants or just don’t know where to go.

This is an education problem, not a facilities problem. The root cause of the high and getting higher healthcare costs in Delaware is the very existence of this unelected bureaucracy, the Delaware Health Resources Board, that literally controls every single aspect of the delivery of healthcare in the state, including acute care hospitals, ambulatory surgery centers, dialysis clinics, home health agencies, all types of long-term-care nursing, walk-in clinics, pain clinics and cancer treatment centers.

A brief history: The federal government passed a law in 1974 that required every state to pass enabling legislation called Certificate of Need if they wanted to get Medicare/Medicaid dollars. By 1979, all 50 states had adopted CON laws. The idea behind this effort was by reducing the expansion of health facilities, healthcare costs would go down. They didn’t. Economics 101 says that if you restrict the supply of a product/service and demand steadily increases prices go up, not down.

Recognizing that the CON laws didn’t do as hoped, the federal government actually repealed the CON law in 1987, saying that more competition and greater access to health facilities might be a better path.

By the early 1990s 15 states removed the CON laws and 35 states including Delaware kept them.

Delaware renamed the CON law the Certificate of Public Review (CPR) in 1999. But the process is the same, namely any entity proposing any new health facility, major equipment, etc. must apply to the board for approval. 

No one seriously disputes the fact that Christiana has a near monopoly in New Castle County, Bayhealth has a near monopoly in Kent County (the Fitch bond rating service crowed in their report that Bayhealth had over 80 percent market share in their service area) while Sussex is a jump bail with Bayhealth, Beebe and Nanticoke crossing swords. Healthcare costs in Delaware have increased by more than twice the rate of inflation for the past 20 years simply because competition has been kept out of Delaware for many years. The state budget is in crisis because of the super-high healthcare costs of state employees both present and retired.

Fortunately, a solution is at hand. Comparing the healthcare costs and patient outcomes in the states that have no CON law to those that retained their CON laws for the past 20+ years has yielded a number of nonpartisan studies both by the federal government and nonpartisan think tanks.

All of the studies conclude that CON laws tend to reduce competition over tjme and increase costs. A recent study done by the Mercatus Center of George Mason University covered every state with and without CON laws and concluded that non-CON states had lower costs, better patient outcomes, no reduction in charitable care and better patient access to healthcare compared to states with CON laws.

For Delaware, they estimated that statewide savings of a minimum of $249 million would be achieved by repealing the CON/CPR law.

Read the study at!(iles/delaware. The Delaware CON/CPR law and its entire process is up for Sunset Review by the Legislature later this year. It’s long past time to end this anti-competition law.

John Toedtman of Lewes spent the last 30-plus years creating or investing in medical devices, diagnostic and healthcare IT companies as investor or senior management, and the last three years screening new firms for venture investing in healthcare companies.


  • Cape Gazette commentaries are written by readers whose occupations, education, community positions or demonstrated focus in particular areas offer an opportunity to expand our readership's understanding or awareness of issues of interest.

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