Oran Smith:
Welcome to the Beyond Policy Podcast of Palmetto Promise Institute. I’m Dr. Oran Smith and today we are speaking with Sal Nuzzo and Lindsay Killen of the James Madison Institute and I’m very happy to have you all with us.
Sal Nuzzo:
Thanks for having me.
Lindsay Killen:
Yeah, thank you, Oran.
Oran Smith:
Two for one. I have worked with Sal in many, probably mostly brainstorming sessions trying to think through how to articulate policy, how to get things understood by the public and by the legislature in ways that they can process to get things done for real people. And that’s what the theme of this podcast is. It’s beyond policy. It’s what policies can we effect, what legislation can we pass to make life better for real people in the state of South Carolina? Lindsay, glad to have you with us as well. Lindsay’s got experience in Tennessee, and I think you wandered off up north at some point, but you found your way back.
Lindsay Killen:
I did, in a delusional state. I did. I’m still trying to make my way back south.
Sal Nuzzo:
She came to her senses. We’re getting her into a warmer climate very soon. She’s on the path.
Oran Smith:
Right, right. Well, that’s excellent. I have a personal anecdote to share at first, and I can’t believe I’m saying this, but I was at the Daytona 500.
Sal Nuzzo:
Nice!
Oran Smith:
My son works in sports marketing and he said, “Dad, I got a deal for you. I’ve got suit passes, VIP passes, pit passes, hotel reservations, travel. Everything’s been arranged.” I have a birthday. In fact, today is my birthday.
Sal Nuzzo:
Happy Birthday!
Lindsay Killen:
Happy birthday!
Oran Smith:
Thank you. So he said, “This is your birthday present, dad. We’re going to the Daytona 500.” I’m like, “Oh, my goodness.”
Sal Nuzzo:
And it’s folks like you and your son that keep Florida free from a state income tax. We love our tourists. We love you to come down and spend lots of money because that is one of the big three economic drivers in the state. And so we are happy to host you and hope you come back.
Oran Smith:
Yes. Well, I still have the sunburn to prove it, but what was wild about it is my son’s firm does some work with a… Well, he does some work with the Kroger, so we had the best suite tickets we had were very sweet and it was in the Kroger hospitality building. It was an entire building. It was late in the race, 25 laps to go, we haven’t been over to the Kroger hospitality area. Let’s go over there. Oh, my goodness. Oh, my goodness. Restart number one, restart number two, and the Kroger car wins the race.
Sal Nuzzo:
Yeah.
Lindsay Killen:
Oh!
Sal Nuzzo:
You got the checkered flag.
Oran Smith:
The place goes crazy and the first thing I noticed is everybody disappears because they were making a break to the finish line. Oh, wow. Yeah, it was a rush.
Sal Nuzzo:
Victory Lane. Yeah, it’s a great scene. I have not been to the 500. I’ve been to the July race several times and just a fantastic atmosphere. At one point, NASCAR was the fastest-growing sport in the United States. I don’t know if that’s still the case. I do believe F1 is right on its heels, if not passing it. I actually just got back from Las Vegas for an event and they are just over the moon and talking about the F1 race that’s coming, I believe, in about eight or nine months.
Oran Smith:
Oh, yeah. Big stuff.
Lindsay Killen:
Oran, did it turn you into a NASCAR fan?
Oran Smith:
Well, I’d always been a fan. I tend to pull for Chevys and I was an Earnhardt guy, so whoever succeeded Earnhardt was who I was for. And of course, we have Darlington here and most of my experience had been at Darlington, the track that’s too tough to tame.
Lindsay Killen:
Oh, you know-
Sal Nuzzo:
That’s a short track. Darlington’s a short track, right?
Oran Smith:
It’s shorter than Daytona. So now I’ve got that experience. I think maybe Bristol is in my future.
Lindsay Killen:
Bristol has got to be in your future. That’s my hometown. You can go stay at my parents’ house. They rent out rooms for the race, or they rent out my old room for the race.
Oran Smith:
What an offer! This is awesome! Let’s go!
Lindsay Killen:
Yeah, I can probably hook you up with hospitality tickets. My aunt and uncle have a suite there for veterans.
Oran Smith:
Oh, this is fantastic.
Lindsay Killen:
They bring in a lot of veterans, but friends as well. The Bristol race is so unique because it’s the world’s fastest half-mile. So you can see all the cars. They’re just right in front of you the whole time.
Oran Smith:
Yeah. It’s like racing in a cereal bowl.
Sal Nuzzo:
Yeah!
Lindsay Killen:
Yes, exactly. It’s because of that one of the more entertaining, or so I hear races, that people want to go to.
Oran Smith:
Fantastic. Wow! And then Talladega will have to be on the list as well that way I get a smattering of all the different tracks. Well, this has been a hot week in South Carolina when it comes to policy. Two entities that for some reason the State General Assembly decided to pit somewhat against one another and that is doctors versus hospitals. And we at Palmetto Promise Institute don’t see the debate over Certificate of Need as a doctor versus hospitals issue because frankly, our interest is the patient. What is the experience of the patient? And as we know, in the 1970s, there’s this picture of President Gerald Ford signing the Healthcare Act in 1974, 1975, that encouraged… You know when Washington encourages something, they’re saying, “We’ll give you money. We’ll give you other Christmas tree items if you will do what we want you to do.”
And that was we want you to set up Certificate of Need programs in healthcare in your state because they say we have Certificate of Need. It will increase charity care of the hospitals. If they don’t have to compete too much, they can provide more charity care. They can enjoy a tax break if they’re a nonprofit hospital, they can do all these wonderful things and they cannot overbuild. They cannot overbuild healthcare. There won’t be empty hospital rooms that drive up the cost of everyone. By the Reagan administration, it was already clear that Certificate of Need, it was just price fixing. The 1970s, I barely remember, but that was when we had wage and price controls. We were fixing the price of gas and things like that, just really a little flirtation with state-managed economic policy.
So it was junked in the Reagan administration but the problem was– and I want you to weigh in on this, the problem was by that time, the CON laws were just entrenched in concrete, and all of a sudden, it becomes difficult to repeal them. However, 10 or 12 states immediately appealed them after Reagan signed the law taking out the certificate of need program, and eventually some more states came around. So I think the figure now is about 40% of Americans live in a state that does not have a Certificate of Need. So by population, it’s not bad. It’s 40%, 60%, but we still have a lot of states. Now, we’re hearing rumors from our neighbors. We’re hearing rumors from Georgia and North Carolina. We saw what happened in Tennessee, but most of all, I’d like to just know your perspective. Certificate of need. Let me play the devil’s advocate. Why is it not a good thing? It seems like it prevents overbuilding and more charity care and wonderful things.
Lindsay Killen:
Well, I can start out and Sal will provide even more color and commentary to this, but it’s not a good idea for the same reason we don’t do this in really any other industry. Think about regulating grocery stores in the same way. We don’t want to want over-investment, we don’t want buildings that once had businesses going empty because we had too many grocery stores and competing corners and people didn’t know whether the food was better at one versus the other. All the arguments we hear about certificate of need laws to substantiate them are that it prevents over-investment, it is ensuring higher quality care, it’s giving people clear decisions around who to see and where the expertise exists, and that it allows hospitals to give more towards charity care.
We’ve never seen that play out. We’ve actually never seen any of those come to fruition, but especially when you think about charity care. Hospitals that benefit from certificate of need or in states where there’s extensive certificate of need programs in place, the hospitals actually give less to charity care than hospitals that are located in states without certificate of need laws. So that’s just a total fallacy. And it would be like saying we shouldn’t have as many grocery stores because we can’t ensure the quality of food at all of the grocery stores in our state is going to be up to standards. So instead of having food accessible to people who need it and letting people make the decisions about the standards that they want to have around the purchasing of the food for their homes, we’re going to limit that and locate a grocery store where we think it’s needed and limit-
Oran Smith:
To put food prices down. Yeah, yeah, yeah.
Lindsay Killen:
The growth of others around us. It just may mean that some people get to have a grocery store two minutes from their house that they can walk to with excellent options, and other people have a grocery store 30 miles, 60 miles from them with poor options or not the right options. So it’s just a very odd way of looking at it, but you certainly understand why hospitals appreciate the ability to not have to compete.
Oran Smith:
We had a four hour… three and a half? Well, it seemed like four hours, hearing this week. We testified that we presented a report that we did in conjunction with the Mercatus Institute. We took roughly 98, 99, nearly 100 studies on cost, quality, and availability. And Matt Mitchell, who’s the guru on this, just eviscerated the opposition. There’s just no studies that show that CON is helpful on any of those. Yeah, but let me ask you, Sal, the hard question, and that is there’s some services that hospitals perform that are lucrative, but then you’ve got ERs. If we allow an open market for healthcare and, say, an ambulatory surgery center, and I’ll ask you to define that, an ambulatory surgery center comes in and all of a sudden they’re cherry-picking all the profitable procedures, then the hospital’s left with the ER. What do you do with that argument?
Sal Nuzzo:
Oh, I just point out the two-word answer. So what? At the end of the day, we should be looking to identify the best possible services for patients needing care. And the notion that somehow a hospital complex, a building in one part of a community became the be-all-end-all of how a patient receives care best is the same notion that big government public school advocates are saying with respect to public schools, that any idea of choice in the matter of public education takes away from big government schools, and our government schools have not changed in 100 years. And so the idea that hospitals are using this as the crux of their argument points to how weak the rest of their case is with respect to these laws and regulations.
I would point out also, you mentioned Ronald Reagan in terms of who repealed the law. One of Ronald Reagan’s famous quotes was that there’s nothing closer to eternal life on earth than a government program. Now think about this. CON laws at the federal level were repealed. A government program performed so badly that even the federal government said, “No, we’ve got to repeal this whole clock and we’re going to encourage every single state to repeal theirs as well.” And ever since Reagan signed that repeal, every single presidential administration, Republican and Democrat, HW Bush, Clinton, W Bush, Obama, Trump, and Biden have all issued letters to states encouraging them to do away with their state-level CON law.
Oran Smith:
This may be breaking news because I wasn’t aware that we’ve got Biden on record, too.
Sal Nuzzo:
Yes. They issued a letter, I believe it was to the state of Alaska that was considering and so they requested an advisory opinion and the Biden FTC did in fact send a letter.
Oran Smith:
Wow! Well, see, the way that the conversation got reignited in South Carolina, Nikki Haley was elected in somewhat of a surprise in 2010, so she was sworn in 2011. Sometime in her first term, she, in her executive budget, just struck out the certificate of need program and wrote a letter to the Obama Administration Federal Trade Commission saying… In fact, she attached a copy of the legislation that would repeal the CON laws and ask the FTC and maybe even one of the divisions of the Justice Department. So they write this joint letter and say, “South Carolina really needs to get rid of these because they’re not performing the function they were intended to perform.” And then along comes Donald Trump, and I think it was a triple here. There were three agencies of the federal government: labor, treasury, and health and human services. They come in and say the same thing the Obama administration said. I provided those quotes to the committee this week and said, “No joke. I really think it may be the only thing that Barack Obama and Donald Trump are on record agreeing on.” It very well could be.
Sal Nuzzo:
I used that very line in testimony in Florida when we filed our support and offered input on the bill that repealed most of Florida’s CON law. Donald Trump and Barack Obama and George W. Bush and Bill Clinton don’t agree on a whole lot of things. This is one where they do.
Oran Smith:
And now Joe Biden, too. I’m so glad you mentioned that because that just covers the gamut, that covers left, right, center. Everybody thinks it’s a bad idea. Well, we’ve had some momentum for our full repeal bill. The South Carolina Senate last year passed at 31 to nine, and then just earlier this year, earlier in the month, there were nine senators absent, but of those that were present was 30 to six and we have a 30 to 16 Republican majority. So that is a bipartisan national position, it’s a bipartisan state position, and it just seems to make sense. But what we’re fighting, I think, is the notion that somehow, we need to look as a policy of the state at whether or not hospitals should be protected from competition as opposed to what’s best for patients. So CON repeal has taken various forms in different states, and the differences in CON reform between Tennessee and Florida I think are interesting for our processing in South Carolina because at one point, we thought, “Eh, we need to do what Tennessee did,” but no, Florida looks better. Maybe, Lindsay, tell us what Tennessee did and whether it’s the end or there’s more coming.
Lindsay Killen:
Sure. It’s definitely not the end. They started the process in 2017. The now speaker of the house, Cameron Sexton, was a representative at the time from East Tennessee and he brought all the hospitals to the table and said, “We’re going to start the conversation and we’re going to do something this year, and while it may not be everything we want to do, we’re going to at least get the process of reform started and we’re going to keep at it. So don’t think that this is going to be the only time you’re coming to the table. You’re going to come back to the table every year if possible, as long as I have influence over the process and we’re going to get it done.” So we started in 2017, and what they did then was lift the thresholds for requirement of the CON process, so hospitals and existing providers could expand services and expand hospital beds beneath a certain amount of investment before triggering certificate of need laws in the state and that was meaningful.
The state definitely saw an increase in hospital beds. They definitely saw an increase in the types of services that certain hospitals and providers were offering, but they knew that was just scratching the surface. So they came back in 2019, they lifted those thresholds even more, they constricted the amount of miles that were regulated that had to exist between one type of provider and another, they reduced that down in certain urban areas. So they’ve definitely come back. They’re coming back again this year. I was just in Nashville last week and talked to some folks. The hospital association had their Day on the Hill on Tuesday. And so the Americans for Prosperity Chapter brought in patients from around the state to have a Day on the Hill at the same time.
Oran Smith:
Same day?
Lindsay Killen:
Yes.
Oran Smith:
Excellent.
Lindsay Killen:
We’re going to reinforce the very real fact that we’re not done, patients matter, and they do have a bill moving through the legislature right now to take another crack at it. But Florida’s really more of the poster child, and I’ll let Sal talk about why that’s the case.
Oran Smith:
Let me ask quickly about Tennessee. I guess probably one thing in Tennessee is the diversity of really powerful, influential hospitals in Tennessee that all had to at least find something they could live with because Vanderbilt and so many…
Lindsay Killen:
Yes, Vanderbilt, you’ve got St. Jude’s, you’ve got HCA, which is the largest hospital corporation internationally. It’s based in Nashville. So you have these seats of power for huge healthcare powerhouses and they carry a lot of weight, and that’s putting it lightly, in the capital and with people, generally. They’re seen as very credible. So they had to come. They all have competing interests, too, and we had to get them on the same page, and we proved that that’s possible in a state like Tennessee where healthcare is its number one industry. We were able to prove that reform can happen.
Oran Smith:
Great. Well, I have to tell you, and Sal and I have talked about this offline, but one passing comment in the State House about two weeks ago from a house member: “Well, we know what we’d like and we know what we don’t like, and one thing we need to avoid is what happened in Texas and what happened in Florida.” What happened in Texas, according to this urban legend that has made its way around the State House, is that Texas repealed their certificate of need law and then rural hospitals closed like crazy all over Texas. The only problem with that, that is Texas repealed CON in 1985. So has every bad thing since 1985 become the fault of repealing CON? I don’t think so. And they’re equally wrong about Florida. So tell us about Florida. Florida story on CON repeal, it was a six-year minimum process. I came to JMI in 2014 and preparing my first ever policy priority sheet for our board, at the top of the list in healthcare was repealing CON laws. And our board chair at the time who had been a speaker of the house in Florida, he took a look at it and he nodded his head and he said to me, he goes, “Now, son,” he was an old timer. He said, “Son, when I was a freshman legislator, we were talking about CON repeal. When I was speaker of the house, we were talking about CON repeal. Long after you and I are both long and gone, they’re going to be talking about CON repeal.” And that’s how powerful and entrenched the hospital industrial complex had become in the state of Florida. The six years that I was involved in the process of it, it was a different level of success each time.
One year success was we got it through a couple of committees. One year it was we got it through one chamber. And then we had really fortunate in the sense that we had a speaker of the house because of our term limits in Florida who came in wanting to enact a healthcare freedom and a healthcare supply side agenda. The top of the list on that was repealing the vast majority of CONs. He wanted them all, but we got rid of everything except hospice’s, nursing homes, and I believe ambulance services. And to your point, once CON laws were gone for the majority of the services in the state, we actually begun tracking the expansion of facilities. So you don’t have facilities closing. You have hospitals building new annexes, you have them building transplant wings, you have hospitals establishing ER annexes in rural areas.
You have new hospitals issuing bond releases to begin the construction of their new facilities. And to give you why this is important, Florida population grows, we have about 850 people a day moved to the state of Florida. Two-thirds of that population growth are people over the age of 60. That’s the cohort of the population requiring more healthcare. We have a growing demand. We need an increase in supply, otherwise, from economics 101, costs are going to go up. So we’re really excited about the fact that a reasonable expansion in the supply of services are going to provide some moderating downward pressure on costs. And that’s ultimately why the hospital entrenched interests are so opposed to it.
According to the moving companies, I don’t know if it’s Beacons or American Van Lines or whoever, the tracks moving, South Carolina is now number four, so the fourth most in migrating states. So we’re seeing that too.
Sal Nuzzo:
Yeah, you’ve got a similar issue on your hands. You’ve got people moving in. You need a growing supply of practitioners, of facilities, of services to meet that growing demand. Now, the hospitals are going to tell you, “No, no, no. We should keep in place the ability for us to veto competition.” The truth of the matter is anyone who’s taken a single economics class in high school or college knows that at the end of the day, supply and demand are going to meet somewhere.
Oran Smith:
The two curves cross.
Sal Nuzzo:
Yeah. You’re either going to have shortages or you’re going to have higher costs. And so let the market on this particular policy, on the margin, let the market be a greater force.
Oran Smith:
You used the magic word rural. I realized that Tennessee and South Carolina and North Carolina, I think, are almost exactly the same percentage rural to urban. Odd how that statistic works. Tennessee, North Carolina, South Carolina. Georgia and Florida are more urban. So what you’re telling me, Sal, is that because of the repeal of CON, more health facilities are being built in rural areas as well?
Sal Nuzzo:
Yes, absolutely. Florida’s got very large urban centers. You think about Miami, which is Miami-Dade County. You think about Jacksonville, Orlando, Tampa, but in between those are extraordinarily rural and exurban and suburban areas that we had a case that we had found in our research of a more rural area that had begun to grow rather significantly south of Sarasota, about an hour and a half away. They tried to establish a hospital. They tried to go through the CON process. The hospital group in Sarasota was able to structurally veto their CON application. Lo and behold, that city is now the fastest-growing city in the state of Florida. It’s called Northport, or it had been at the time. It had a growing population of folks from a lot of different demographic categories, but a lot of retirees, and they were having to drive 90 minutes to go see a cardiologist, to get to a hospital to go see a specialist. At the end of the day, the hospitals exist to make money. They exist as a for-profit enterprise, even in the nonprofit space. And so when you structure the narrative and the argument around what is best for patients, it becomes abundantly clear that there is not a place for CON laws in that argument.
Oran Smith:
Here when it’s being debated in the general assembly, sometimes the other side will just say, “Rural, rural, rural,” as if it’s this Trump card. As soon as we say, “Rural,” you’re on the defensive because you’ve got to somehow come up with a scenario where, without CON, current rural hospitals and facilities can survive. Speaking of Tennessee– Tennessee and North Carolina have had more rural hospitals closed than any other states and both of them, North Carolina’s been flirting with CON repeal and they seem to be trying to do it in combination with something else in healthcare that somebody wants to come up with a package. Tennessee’s already started it. Tennessee’s going to continuing it, so let’s see.
The two states that have the most rural hospitals closing since 2005, according to the University of North Carolina at Chapel Hill Statistics, they are both either have passed CON repeals or significant reforms, or they’re going to very shortly. So it just doesn’t make a whole lot of sense that somehow, rural areas are going to be hurting. The other thing about South Carolina is a lot of folks that are in the area that has a rural hospital, they leave the county to get services other than emergency room type services in other areas, because the more urban areas, maybe the perception is that there’s more variety of providers, maybe they think the care might be better. So the rural areas right now, many of these hospitals are not being patronized by the people who live there.
Sal Nuzzo:
It’s entirely a scenario that can be expected to happen in that case, yeah.
Oran Smith:
Yeah, yeah.
Lindsay Killen:
And if you look at states that have gotten rid of their CON laws, you don’t see this disparity where suddenly, rural care is no longer accessible. In fact, you see the opposite. You see more investment in the healthcare industry at large and you see more accessibility for rural patients closer to home, and you start to see more diversification of expertise as well. Rather than these hotspots located in one or two areas of the state that offer specialized care, you start to see specialized care popping up in other areas of the state. And in fact, Florida has a great example of that where BayCare Health tried to expand in 2006, 2007 in a less populated or less urban area of Wesley Chapel. At that point, it’s a much smaller town. And they came in, they said, “We want to expand. We want to have ambulatory service center.”
They had their CON rejected and then came back after CON reform happened and were able to establish an outpatient primary and urgent care center, and they decreased wait times for patients. We have research that shows that. By the way, that’s not an often talked about point or benefit of CON reform, but it’s a huge benefit if you think about all the reasons why patients also not only drive to more advanced care facilities far from home and forego their rural care, but also forego care altogether because the wait times in emergency rooms and other care facilities these days are so extensive that middle income and low income patients cannot afford that. They can’t afford to miss work or half a day’s work to go sit for an hour or hour and a half in the ER and then sit another 30 minutes to an hour in the room once they’re taken back. That’s all a product of a concentrated market. And so when BayCare expanded, they were in Trinity and near Wesley Chapel. They were able to decrease wait times. They added 60 additional hospital beds for surgery, other forms of observation and patient care. And now, several years later, within five years, Wesley Chapel, their second-largest employer is the healthcare industry and that’s huge because those are quality jobs for people where jobs didn’t exist before.
Oran Smith:
So being built but not being overbuilt is just-
Sal Nuzzo:
And to Lindsay’s point, another quick anecdote. I’m in Tallahassee, Florida. We have two main hospital providers. We have an HCA hospital and then we have Tallahassee Memorial Hospital. After the CON repeal, they both built ER annexes in different parts of the community, but what they did, and this is just… I think it’s brilliant, they have billboards now with digital depictions of the ER wait time at their facility and at the competitor’s facility. So you can be driving down-
Oran Smith:
On one billboard?
Sal Nuzzo:
Yeah, on one billboard. They compete.
Oran Smith:
Wow! We have it in South Carolina where it’s just this one hospital shows the wait time, but you have the competitors on the same billboard!?
Sal Nuzzo:
Yeah. TMH’s ER annex has a billboard in Tallahassee that shows their wait time and it’ll be like, “10 minutes. Our competitors’ wait time, 45 minutes.” And so they’re doing these things that create markets where markets did not exist because of the bureaucratic process behind these regulations.
Oran Smith:
Wow! Wow. Let me give you some real quick stories from South Carolina. First of all, Roper St. Francis wanted to build a hospital in Berkeley County. Berkeley, Charleston, and Dorchester are down near Charleston and it was 11 years before they began to see patients in 2019. Piedmont Medical Center in Fort Mill, which is up toward Charlotte, opened in September 2022. 20 years after they filed their first CON application with the state, Horry County, which is Myrtle Beach and Conway and other areas up north near Georgetown, Horry County’s population has grown 400% since 1970. That’s twice as fast as Florida has grown since 1970. So a lot of people, 73,000 new residents of Horry County in the last 10 years and there are between five and six current applications for facilities to be built in Horry County. Most of these, a heavy majority of these have already been approved by the Department of Health and Environmental Control.
Sal Nuzzo:
They’re just held up.
Oran Smith:
Now, they’re held up $300 million of investment in Horry County that’s stranded because they are suing each other and they’re just enriching lawyers. They’re just paying lawyers.
Sal Nuzzo:
And that’s a big problem that gets buried in all of this, is that you have the direct effect of the CON application process and the veto and all of that, but then you have the indirect effect, and that is the decision making process that goes into whether or not to even consider going through a CON application in the first place. And so often, they’re having to bake into the costing of a facility the CON application-
Oran Smith:
The litigation costs.
Sal Nuzzo:
The litigation costs, and at the end of the day, who bears that? The insurance companies and the providers and then the patients. We all bear the cost of this. And when you look at what is driving healthcare costs through the roof, this is one piece of that puzzle.
Oran Smith:
Of course, I’ve always got to go back to rural, but that’s got to be a factor in the rural areas as well, because if you want to open an ambulatory surgery center… By the way, we’re in the high 30s of the 50 states plus DC. We are way down 35, 36, 37 for orthopedic ambulatory surgery centers and freestanding ambulatory surgery centers that do other things as well. These are marvelous opportunities to have someone get the surgery they need, get it done right, but not keep them multiple nights in a hospital. The insurance companies now are more and more providing these calculators where you can go in and calculate what your actual costs might be under that provider, and all of a sudden now, we’re able to see what the cost at an ambulatory surgery center would be versus a hospital stay. It is unbelievable the dramatic difference.
Sal Nuzzo:
And there’s one out of Oklahoma. I believe it’s the Oklahoma Surgery Center.
Oran Smith:
Yes!
Sal Nuzzo:
Keith…
Lindsay Killen:
Keith Smith.
Sal Nuzzo:
Keith Smith. In fact, he spoke at the conference that I was speaking at just this week and they talk about a knee replacement, and he’ll talk about the fact that the soup-to-nuts cost of a knee replacement at his surgery center is something like $2,500, but you go to a hospital and by the end of the day, you’ve had it and your insurance company is paying $25,000. The fact of how this has all evolved into the state of where we’re at, it’s a multi-headed hydra in terms of trying to [inaudible 00:40:39] in the cost, but CON laws, to bring it back there, CON laws are absolutely driving up healthcare costs because they allow hospitals to effectively control a market where they exist.
Oran Smith:
Yes. We had a meeting that was somewhat confidential in the upstate of South Carolina, and we had surgeons of various types come and we had to guarantee them some confidentiality about even where we met and what would be said after they left, but they provided us with some anecdotes that really amazed me. One was one of these surgeons, I’m trying to make sure I don’t accidentally just point a red laser pointer at the person by describing him too extensively, but this was a situation where he had a friend who worked for a company that’s self-insured and this company had told the friend of this surgeon that the company is going to send you out of state. It could have been to the Oklahoma Surgery Center. “We’re going to send you out of state. We’re going to pay for your travel, we’re going to pay for your accommodations. We’re going to pay for your surgery. You’re not going to get it done in South Carolina,” because this self-insured company said, “We just can’t afford that.”
Sal Nuzzo:
Yep.
Lindsay Killen:
Mm-hmm.
Oran Smith:
Yeah, absolutely unbelievable. Well, I think we have some momentum in South Carolina. I sure hope so. The Senate sure provided a lot of momentum and there’s some stalwarts on the house side that have been working this issue within the caucus and within the body for quite a long time. I understand there’s potential good news coming out of Georgia, that they’re starting to get some momentum there. I hope if we are able to do this again and talk about healthcare, maybe some issues like the right to shop and things like that. I hope to be able to report to you some progress in South Carolina, but I think having this conversation with the two of you who have been there will provide a perspective for not only legislators, but citizens and patients, so that when we talk about healthcare, we’re talking about patients first and what actually is working in other places in the country. So can’t thank you enough for taking the time to be with us today on Beyond Policy.
Lindsay Killen:
Thank you, Oran.
Sal Nuzzo:
Yep. Thanks.
