Believe In Arkansas
Believe In Arkansas
What's REALLY limiting access to health care in Arkansas?
A recent study ranked Arkansas' health-care system 47th in the country--and dead last for health-care outcomes. There's currently a moratorium on increasing the number of mental health care beds and waiting lists for those beds.
As ridiculous as it seems, for almost half a century Arkansas law has mandated that the state restrict the supply of health care available to residents through Permit of Approval laws.
Ryan's guest is Jaimie Cavanaugh, an attorney with the Institute for Justice. Author of the report Conning the Competition, as part of IJ’s legislative team, Jaimie works to expand access to healthcare by ending certificate of need laws which are known as Permits of Approval in Arkansas.
To learn more and see how AFP-Arkansas can help you or your organization increase your impact in our state, email us at infoar@afphq.org or visit us at believeinar.com.
Welcome back, everyone to Believe in Arkansas, the podcast that believes that free people are capable of extraordinary things. And you know, freedom. What is freedom? You know, my definition is, is that it's where I'm making more decisions for myself than decisions that are being made for me. And there are issues that we still have to contend with in the state of Arkansas to where individuals who don't know us don't know our problems, don't know our needs, are making decisions about those needs and about our problems without even knowing the nuance of you as an individual. And what it is that that will actually solve your problem. So today, we're gonna talk about one of those problems moment tee this up a little differently today. You know, what would you say the state of Arkansas limited the number of grocery stores that we could have in the state, Arkansas is known to have a hunger issue. It's known to have food deserts, particularly in rural areas, grocery stores are not opening in certain areas. And so you know, what would it be like if we limited the number of grocery stores, and in addition to an arbitrary cap on grocery stores would have each of these establishments had to go through a process to get special permission from a board of bureaucrats every single time they wanted to open new location, or just expand the offerings that their grocery store was going to give to the public? And then what if that grocery store could be blocked from opening because a competitor in a neighboring city said, you know, hey, we're a grocery store, we're already here, they can drive over here to to the next town over? You know, we wouldn't stand for that. We would think that's very unfair. That'd be government overreach. You know, and thankfully, the state of Arkansas does not impose these silly kinds of restrictions on most industries, but they do impose them on health care facilities. And in order to open a new health care facility in Arkansas, or to increase bed capacity. These facilities have to jump through countless government hoops, while dodging every piece of red tape imaginable. So we're talking about something very important, you know, just up there with hunger. And food is the health of individuals. That's something that they really care about. They want to stay healthy, they don't want to be sick and ill. And yet, Arkansas has some barriers to where healthcare facilities can open when they see a need in the marketplace. So we're going to talk a little more about that. But to bring this down a little more specifically, a recent article that came out, called beds for psychiatric patients are a must for Northwest Arkansas, the river valley leaders say, and it goes through, and it talks about how the demand for inpatient behavioral health services is growing. And it's it's growing faster than just the general population growth in Northwest Arkansas. And that the numbers of patients with issues related to trauma, stress substance abuse from COVID 19 pandemic are continuing to rise, and the population has outpaced the resources available for these types of mental health care services. And it highlights that Arkansas ranks 45th Among the US states and access to mental health care. And so with all of this, this this little storm of COVID, increasing the number of mental healthcare patients that are needing services, what is going on? Shouldn't we be doing something more? Should we not be expanding the services? Well, it's interesting because later on in the article, it goes through and talks about how there are additional buildings being being built right now. In new construction happening. The veterans health care system of the Ozarks is building 20,321 square foot facility. And for behavioral health, the $13 million building is scheduled to open this fall but will not expand its capacity. Will they previously the article talks about the need for capacity. They're building a new building, but no capacity. Why is that additional to that? suburban community centers, has a new 41,000 square foot facility in southeast Rogers that it's building, but it's inpatient care will not be a part of the Counseling Center. It is interesting that we're building new buildings but not adding any additional bed capacity or services for those that are in need of this mental health care. And it's fascinating to me that the article did not actually dive into the true problem that is hitting all the way around it, but hasn't actually identified. Well, today we are going to talk about why is it that Arkansas would spend millions of dollars 10s of millions of dollars to build new mental health care facilities but not expand its its access to care or expand beds. Why is that? Well, it comes down to a two permitting and in Arkansas have, we have permits of approval also known other places as certificates of need. And this goes back to what I was previously saying before you can expand a healthcare facility in the state of Arkansas, you have to get permission from the government and not only permission from the government, you also have to get permission from your competitors before you are able to open up the services. So with Arkansas, having a population that is suffering in mental health, why would we continue a failed policy that many other states have already repealed? Just recently, South Carolina. So today to talk about this, we have a resident well, not a resident expert in this, well, she's always invited to move into the state, Miss Jaimie Cavanaugh. And Jaimie is a litigator with the Institute for Justice. Her practice focuses on protecting economic liberty, private property rights and free speech. And Jaimie is currently representing entrepreneurs in Kentucky seeking to eliminate the state's certificate of need law, which prevents them from providing home health services to refugees and immigrants. Jaimie, it is awesome to get to have you on as a guest on believing Arkansas, thank you so much for taking time out to be a part of the show.
Jaimie Cavanaugh:Absolutely. Thanks for having me, Ryan.
Ryan Norris:So, Jaimie, I know you and I have chatted about this. And you're you are connected to what is going on around the nation regarding this. But the first question that I have for you is how this certificate of need programs. You know, here in Arkansas, the permit or approval program, how has it affected competitiveness of health care markets, especially in terms of fostering or inhibiting new health care facilities and services?
Jaimie Cavanaugh:That's a great question. I mean, I think when you start talking about these laws and tell people, hey, the government is going to restrict the number of facilities. We wonder right away, well, why would they do that? And what kind of effects would that have? And our basic instinct would be to say, Well, if you decrease the number of facilities or services available for anything, even outside health care, you know, access is going to go down, costs might go up. And innovation might decrease, there's not going to be competition. And so I've talked to a lot of economists who study healthcare economists who study these issues. And they've told me that, you know, the thing that they teach them and economics is to kind of be skeptical and test what you think your first assumption is going to be. And they laugh because they say certificate of need or permit of approval. It's the only area that that your first instinct is 100%. Right, you think that limiting the access to new facilities is going to be harmful for patients? And it is it absolutely is it you know, decreases innovation. I think that's one of the big things that people don't talk about a lot. But there's, you know, many different ways that controlling the number of facilities and services just end up with a lot of devastating consequences. And at this point in the US, we've been having certificate of need laws or permanent approval since the 1970s. Not every state has them. But we have, you know, five decades of research now, that show how you know, they're not, they're not helping increase access to health care services, they're decreasing access. And also, we're starting to see the problems like what you just mentioned, with the mental health care facilities, we're starting to see what happens when we purposely decrease or limit the growth of facilities over decades. You know, these problems are starting to catch up to us, they've probably been here all along. But the mental health example is, you know, such a great example of a problem that all of a sudden, more people need services and money states, they're all stepping back saying, hey, why don't we have enough beds? And while it's because for decades, you haven't been letting these facilities expand.
Ryan Norris:And so, you know, government is known for coming up with the best and brightest ideas. So why in the world did they even come up with certificate of need laws at all?
Jaimie Cavanaugh:So the federal government in the 1970s, passed a law that conditioned certain health care reimbursements, and states enacting certificate of need laws. At one point, every state except Louisiana had these laws. And the thought was the federal government said, Hey, we're spending too much on health care. So maybe if we decrease the number of hospitals, if we slow the rate at which hospitals are growing, that might be one way we could control costs. You know, this is what the federal government's thinking. And that makes sense. From one perspective. If we had zero hospitals, we'd have zero spending on health care. So the original purpose was to decrease the costs for health care, but specifically for the federal government. Now, at that time, federal reimbursements were done in a different way. It was what's called the cost plus basis. And the the sorry, the facilities were actually reimbursed for the full price of or the full cost of all the services they provided. Now, we know that's not the case with Medicare and Medicaid today. But at the time, that that type of reimbursement may have incentivize facilities to be growing faster at that time, because there wasn't as much risk if you opened a big hospital and had lots of beds, you knew anyone who came in, you'd be reimbursed for the full amount that it costs to treat them. And so Congress realized that certificate of need laws were not working, and they repealed the federal mandate to for that required states to have these laws. 12 states have fully repealed those laws, several other have repealed for everything except maybe one service. And then Congress also fixed well changed, I should say, changed the reimbursement rates. So the incentive that was there in the past, for facilities to grow kind of unchecked, just doesn't exist anymore. And we know that health care, like any other business thinks through, you know, what, what the market conditions are, like in their area. And so we can trust the facilities to figure out what kind of services are needed and how many beds are needed and stuff like that.
Ryan Norris:So in so instead of actually trying to solve the problem of we're spending a lot on health care. And we might want to try to improve health overall, they decided we're just going to restrict the source at which you can get health care. You know, I think that the only worse idea was if they passed a law say we're just going to outlaw sick people, you know, no sick people, that would have just been faster, you know. So kind of kind of crazy that government have gotten away glad that the federal government has repealed it, and rolled that back that makes sense. And then giving the facilities the ability to make the call on what they think the market is, and what is needed, and you know, what their patient population may be for those particular service and then adjusting the services and and providing the resources to support those services. That seems like a much better approach, then taking it to government bureaucrats who will give thumbs up in a thumbs down into where someone can actually in the thumbs up thumbs down scenario, put their thumb on the scale a little bit and say, No, we don't quite need these. Because an area that I've been doing a little research, Jaimie is in this. We created a moratorium for psychiatric residential treatment facility beds in the state of Arkansas, we have 520 current beds, as of January 1 2022, when the last reports I looked looked at, they had at least 53 more beds needed. But in conversations with these organizations, they're like, We have waitlists that many people are on. And then another component of this and you hit on and regarding the reimbursement is because the reimbursement rates in Arkansas hadn't changed for a while they were to stay solvent because they can't expand their beds. There's a moratorium, no new beds, no new facilities. They are taking higher paying insurances, not the Medicaid kids as much, or out of state insurances or Medicaid that are paying higher rates, because they're trying to keep the doors open. You know, their cost, their fixed costs have gone up just like everyone else's did during the COVID pandemic, particularly. So there's this moratorium isn't even allowing them to adjust to just stay solvent and open really. But I found that that kind of fascinating on that. The other question that I have on this is the you know, Arkansas is a rural area. So how has the permits of approval programs affected health care access and quality, particularly in the underserved rural areas?
Jaimie Cavanaugh:That's a great question. And something that comes up a lot in discussion about these types of laws. And there's a lot of people who argue that we need to keep primitive approval in place to actually protect rural facilities. And their argument is that if there's too much competition in a rural area, none of the facilities will make enough money to keep the doors open. And you know, everyone might close or some, some facilities will be left with all the Medicare Medicaid patients like what you were just talking about. But luckily, like I said, we can study what's happened and all the states that have gotten rid of these laws and their states as diverse as California and Texas. So this isn't ideological. But we can see that there are more hospitals per capita in rural areas and more surgery centers per capita in rural areas in states that have repealed their certificate of need laws. And the surgery center fact is actually really important because a lot of people will say, Well, if we let other services service providers open Then like imaging centers or surgery centers, then all the patients who normally go to the hospital and spend their healthcare dollars there are going to leave and go to all these private facilities. And in theory, you think, okay, maybe that would mean the hospital might lose some money. But we don't see that happening. In fact, we see more hospitals and more surgery centers, because everyone's doing better. Now more people have access to care more patients are seeking out the care that they need. There aren't just a fixed number of patients so that if the hospital loses five privately insured patients, now all of a sudden, they can't balance their budget, it's not like that there's, you know, more people who need access to care that aren't getting it currently.
Ryan Norris:You know, in Arkansas, we have nearly every single county is medically underserved. Out of 75 counties, 59 of them are, you know, seriously, and then 15 of them are close to being serious in being medically underserved. I think that, you know, even among a population of 3 million people in the state of Arkansas a little over that now think 3.3, maybe there is definitely room in the marketplace for innovative ideas. You know, we've had some conversations with some healthcare innovators, and they're talking about the idea of micro hospitals, so they can put into into rural areas that have nearly everything that a hospital, a patient would need there for those services or for the traumas that they would see in a rural area. And they're stifled in states, because they have to fight against the certificate of need laws. I was found this interesting, because you you brought up the idea of you know, well, you know, we're afraid that if we opened up care too much in rural areas that are that would close the doors in rural areas. In South Carolina. It was a bipartisan, awesome push to repeal certificate of need in South Carolina, just this past legislative session that they had. And the argument was brought up. Well, we're going to end up closing and services in rural areas. And the the Democrat legislator responded, like, What are you talking about, you don't have services in my area. And that's the component is that even if they have a little there could be more if innovative ideas were allowed to flourish. And I found that conversation that was given to me by my colleague, as being true to form that Arkansas has these areas, every single county medically underserved. What do we have to lose in opening up the market to ideas that may innovate that we just haven't thought of yet? I mean, I've never heard of a micro hospital until a few months back. And it sounds like a fascinating idea that I'd love to see proliferated in areas of Arkansas. But certificate of needs, or permits of approval are used not just to balance out care to make sure everybody gets any, it's also a market protection mechanism. So to that point, you know, are there any instances that you know of, and I think Kentucky may be one that you are very connected to, to where services are being offered, but are being denied because a certificate of need?
Jaimie Cavanaugh:Yeah, I have examples from all over the country. But yeah, I'll start with Kentucky where I have two clients, that they're immigrants from Nepal, and they noticed that there's a large Nepali speaking community in the Louisville area, and they wanted to open a home health agency for the elderly community. And the state said no, they applied for their certificate of need. The state said no, the local $2 billion hospital conglomerate also intervened in the process and said, told the state you know, don't let them have a certificate of need. The state said, you know, we, we think that the numbers are fine. We think everyone's getting the service that they need, even though my clients could say, No, we're looking around our community, and they're not getting language appropriate care. And we do want to offer these services that people need. And that's, you know, such a prime example of where someone on the ground sees a problem has a solution. And Home Health actually is something that federally, CMS and other agencies support expansion of home health, because it's a lower cost alternative to some other forms of care. And just anyone who has the option, I think almost anyone would rather get care in their home than have to go to a hospital or a nursing home if that was possible, depending on the circumstances. So you know, it's it's something that would be good again, for the state's bottom line. It's something that would improve outcomes for patients. It would keep hospital beds open for more serious emergencies. But the state said no, you know, we did a we did a calculation with this formula that we use and we say we show that we have enough home health services and you know, they do it all around The country for hospital beds for mental health services for mental mental health beds, like you were saying where there's a need right now in Arkansas, you said of more than 50 beds, and yet, there's still no you know, mechanism to allow any facilities to add those beds.
Ryan Norris:This is really fascinating to me. So Nepalese community, and individuals seen a market that's been underserved in one that's very fascinating, because I've heard of research that is done about how cultural competency in health care provides provision improves outcomes for those underserved populations. And in this one, it was specifically about just the African American population, which is a significant portion of the American population, and that there are things that are missed. Because there is an assumption of that, you know, we're all humans, we all have fairly much the exact same biology, and that you can do the same medicine practice the same medicine in the same way and get the same result with every single person that comes in. But that's not the case. In fact, I have a a firsthand account of a friend of mine, whose husband was misdiagnosed African American man misdiagnosed with cystic fibrosis, because they thought it was all these other things other than that, because of race based factors. And so he went and he's now in his 60s, but he went all this time suffering with an identified problems that they have rich visually find out a cystic fibrosis, and they've actually created an entire organization of ground, cystic fibrosis for African Americans, as a result of that fall down. So you know, some good is coming out of that some more education to to the medical profession is coming out of that. And so that's very fascinating, because you can have a medical facility. But it can't be just one, one type of medical care provision, and it needs, it needs different perspectives, so that more people come to access the care and have the outcomes that are relevant to what their cultural issues are. There's some you know, I don't know all of them, but there are some that look at medical care differently in their culture, than I may in my culture, and that's completely fine. What we should want is a healthy society. Therefore, we should have the market be able to adjust, like in this case in Kentucky, so that more people are living longer fulfilling healthy lives.
Jaimie Cavanaugh:That's a really great point, because a lot of states that rely on these formulas to figure out what the number is of beds that they need, or home health services, the formulas can't take anything like language or cultural competency into account. It just sees, you know, thinks that all patients are interchangeable. And we know underground. Of course, that's not true.
Ryan Norris:Right. And so I love that. I love that idea. This is really kind of enlightening me again, to another component of why certificate of need laws are outdated, is that just because you have a physical building that says it, it provides health care, does not mean that everyone in the area would be attracted to access that? Nor would they maybe receive the care they needed? Should they access that because each person is a unique, individual, unique needs unique backgrounds. That's very fascinating. Jaimie that this has really got me thinking, I hope that everyone listening will take that into consideration when you're in this time to where we are focusing in on the disparities among ethnicities, particularly in in all kinds of various economics, education, etc. Healthcare is one to where there's conversation about the access, but not necessarily as much conversation about the practice of medicine to the individual, to the individual, or just the general, general different subcategories of the population. That is very, very interesting. You know, responsiveness is a big key factor. In con, you know, it's a factor that can limit that and we see how it's kind of limits that potentially in deferred diversity of care or the application of that care. But you know, during the public health emergencies, like COVID-19, you know, it was a little in flexibility around in those states that had have the certificate of needs. And in fact, I actually wrote a letter of recommendation to our governor at the time saying, hey, if we're going to need flexibility in this time, we probably shouldn't be limiting the number of beds that we have for anything. You know, just just little me sending it to my governor didn't respond to it or anything, didn't have any changes in the State of Arkansas. We tried to do everything up until that point. Do we did not want to touch those CON laws? But you know, how is how are you seeing that in flexibility? Like, what is that creating? What problem is that creating when you need that more more access rapidly, but you can't do it, you got a process to follow.
Jaimie Cavanaugh:You're right. That's COVID is a great example. There's research that shows that states with certificate of need laws were twenty-some people in those states were 27%, more likely to be denied a bed at a hospital during pandemic surges. And most of the states with certificate of need laws or primitive approval, had to suspend their programs in some way during COVID. I know that we said Arkansas didn't do that. But I think they did allow hospices to increase capacity a little bit during the pandemic, because that was another service that was limited by primitive approval laws. And people needed increased access to that care as well. So you know, lots of states around the country had to suspend their laws pertaining to hospital beds, because of course, we know hospitals had to quickly respond. And sometimes the certificate of need or permit of approval process can take months, if not years to get a final decision. And so we didn't want to bind hospitals hands in that way during that time, and we should, we should think about why we're doing it all these other times. But, you know, this happens in other contexts, too. Last fall, there was a surge in cases of RSV, and we saw children's hospitals needing to expand capacity. And we saw governors in certain states again, saying, hey, we have to suspend these laws for a little bit to allow capacity to grow. And it's like, why are we waiting every time to have kind of these public health emergencies come up, instead of adjusting the laws repealing and reforming the laws? Because we know that these are harming patients and decreasing access to care.
Ryan Norris:Yeah, I mean, you have to have that rapid flexibility in those instances, and we're already having conversations now the new COVID shots are out, you know, get your get the whole cold collect the whole set seems to be the the mantra. And so in case, you know, not to be too cavalier about it or anything, but just in case that it should be as bad as it was, or even worse. We shouldn't have artificial barriers to rapidly adding medical capacity into into our state of Arkansas, you know, anywhere, but definitely, you know, here in Arkansas, we have the ability to improve care. And, you know, Jaimie,, we've been talking about different different areas, but a little more focused on the mental health care capacity. And the Arkansas Americans for Prosperity, Arkansas did put out a poll recently of 521 likely Arkansas voters and a plurality of Arkansas voters support easing certificate of need restrictions on mental health care facility facilities were 49% supportive and 23% oppose. That was 28%, who were just didn't know enough about the issue. But those that did know a bit they do that's 49%. They felt like yes, this is a big enough issue to where I would support reforms in certificate of need laws are Kanzen Arkansas voters are 53% more likely to support easing certificate of need restrictions on mental health care facilities, if they are made aware that it could save taxpayer dollars. You know, if you have a care facility that is receiving funds from the state, and there's innovative ways of providing the healthcare in unique ways, then you know, the certificate of needs become the barrier to that approval right now, the idea is there's only X amount of dollars in the state of Arkansas for for the Medicaid or for the government assisted. And therefore we all want a piece of that the piece should only be X amount of divided by X amount of beds, we have so many beds, and that's the way they're looking at it. That's not good for this patients in Arkansas. And we're seeing that we have 53 beds and need as of January 1 2022. And that's just what they've stated they have lists of hundreds more people waiting for care. You're even hearing that in that article that we just referenced at the top of the segment. And then voters are 48% More likely, compared with just 25% less likely to support easing con restrictions if they're made aware that con barriers have likely increased the number of vulnerable Arkansans with severe disabilities who are stuck on waiting for waiting for care on Medicaid waiting lists. So Arkansans are becoming more educated about this issue, Jamie, and they are seeing that yeah, you know, it just doesn't sit right that if we have needs, that there should be a governing body of a few people. who get to say whether we can meet those needs or not, whether that be us innovating on it, or you know, hey, let's be open minded, maybe some of the best solutions come from outside of the state. We shouldn't be protectionist, we should care more about the patient than anybody else should be patient focused care. So. So, Jaimie, that that's heartening, I think, to see that we have some plurality here in the state of Arkansas.
Jaimie Cavanaugh:Yeah, you're right. And like you mentioned, and South Carolina, con repeal passed unanimously through the house. So we're seeing a lot of support around the country and other places, Democratic and Republican states are reforming their laws. So we're seeing movement on this issue. People are aware, becoming more and more aware of all of the harms. I mean, federal agencies like the Federal Trade Commission, and Department of Justice, and the department for Health and Human Services all call on states to repeal these laws. They say they're anti competitive, there's no evidence that they decrease costs at all, and have, you know, even been involved in some cases in efforts to reform laws in certain states. So you know, the Federal at the federal level, the agencies recognize that these laws are harming people.
Ryan Norris:Well, I can't put a cherry on top of this conversation better than what you just did, Jaimie. So what I would ask is, how can listeners maybe contact IJ or coming access more of your work that you're doing on this issue?
Unknown:Yeah, so you can see our website ij.org, you can see all the cases we're working on. We also have a legislative section that has model legislation. And then we have two reports for about certificate of need on the website. One is called Conning the Competition that compares all of the certificate of need laws around the country. And there's a second report that I just published last month, called striving for better care. And this report goes into Kentucky's certificate of need program but also contains a literature review of all of the academic studies of certificate of need. So if anyone wants to learn more about what the research says, you can look, they're striving for better care and see a review of 128 academic papers.
Ryan Norris:And if you would like to learn some more about certificate need permit of approval for the state of Arkansas, you can reach out to me at infoar@afphq.org. That's my email. And I'm happy to share with you research white papers, the polling that we have seen, because if we want to improve access to care, increased quality of care, potentially lower cost, and definitely open up room for innovation which Arkansas desperately needs. Then we need to consider repeal of our certificate of need laws here in the state of Arkansas. So again, for more information about Americans For Prosperity or specific information about Arkansas and certificate of need infoar@AFPhq.org. Jaimie, thank you so very much for being a guest here on Believe in Arkansas, and everyone we hope you'll join us for the next segments that are coming up. And until that time, we still believe that free people are capable of extraordinary things.