The Mississippi Justice Institute has filed a federal lawsuit on behalf of Charles “Butch” Slaughter, a licensed physical therapist who owns a clinic in Jackson and would like to start a home health business for new patients. However, he can’t do that because of a 40-year-old law that makes it illegal to start a home health agency in Mississippi.
Other obstacles like the Mississippi Certificate of Need laws (CON) could also hinder Slaughter and those like him in a battle over whether the community really needs a home health agency.
”The ban on new home health agencies is an absurd law that serves absolutely no purpose other than preventing legitimate competition and creating an oligopoly for existing providers,” said MJI Director Aaron Rice. “The CON laws are just as bad, and essentially serve as a competitor’s veto for powerful industry insiders.”
“Patients have been increasingly seeking in-home physical therapy during the COVID-19 pandemic,” said Slaughter. “I can’t believe it is illegal for me to start a home health business to help more patients. Other companies are already doing this, but it’s illegal for anyone else to do it. It makes no sense.”
According to MJI Mississippi law requires any healthcare providers to apply for and receive a certificate of need from the Department of Health before being able to open, expand, relocate, change ownership or obtain medical equipment. However, the process isn’t easy and can be expensive. That can cause some competitors to protest whether or not there is a realistic “need” for a new healthcare outlet.
The certificate is not based on providing that the facility will be safe, sanitary, or high quality. Rather, applicants must convince the government that opening a new health care facility will not financially hurt competing health care businesses.
Since 1981 only way for a new home health agency to receive a certificate of need and enter the market has been to purchase a previously issued certificate from the owner of an existing agency who is seeking to sell.
If there are no previously issued certificates of need for sale in the desired service area, then healthcare entrepreneurs simply cannot provide home health services.
According to MJI, the say CON laws are a failed public policy that was originally intended to drive down health care costs. After experience showed that they actually had the opposite effect, some states abandoned them. But they remain on the books in 35 states, including Mississippi, because existing providers who benefit from them lobby furiously to keep them in place.
Currently, Mississippi is one of only 16 states that require a CON to open a home health agency, and one of only two states that has a complete ban on new home health agencies.
Numerous studies have shown that CON laws do not live up to their original goals, but instead decrease access to healthcare, increase costs for consumers, and limit competition.
In 2016, the Federal Trade Commission and the United States Department of Justice issued a joint statement, concluding, “CON laws, when first enacted, had the laudable goals of reducing healthcare costs and improving access to care. However, after considerable experience, it is now apparent that CON laws can prevent the efficient functioning of healthcare markets in several ways that may undermine those goals. First, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation. Second, incumbent firms seeking to thwart or delay entry or expansion by new or existing competitors may use CON laws to achieve that end. Third, CON laws can deny consumers the benefit of an effective remedy following the consummation of an anticompetitive merger. Finally, the evidence to date does not suggest that CON laws have generally succeeded in controlling costs or improving quality.”
“The government cannot pass laws merely to protect businesses from legitimate competition,” said MJI volunteer attorney Seth Robbins. “Healthcare costs are out of control. We need more competition in the healthcare industry and less government intervention and protectionism. We’re proud to stand with Mr. Slaughter in his fight against these senseless government policies.”
“Mississippi should be encouraging entrepreneurs, not outlawing them,” said Rice. “We look forward to vindicating Mr. Slaughter’s constitutional right to earn a living, and seeing him get back to growing his business”
The lawsuit was filed in the U.S. District Court of the Southern District of Mississippi.