Legislature(2021 - 2022)BELTZ 105 (TSBldg)

04/21/2021 01:30 PM LABOR & COMMERCE

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Audio Topic
01:30:09 PM Start
01:30:56 PM SB26
02:59:54 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Invited & Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
           SB  26-REPEAL CERTIFICATE OF NEED PROGRAM                                                                        
1:30:56 PM                                                                                                                    
CHAIR COSTELLO announced the consideration of SENATE BILL NO. 26                                                                
"An  Act repealing  the certificate  of need  program for  health                                                               
care facilities; making conforming  amendments; and providing for                                                               
an effective date."                                                                                                             
1:31:33 PM                                                                                                                    
SENATOR DAVID  WILSON, Alaska State Legislature,  Juneau, Alaska,                                                               
sponsor of SB  26. stated that the healthcare  services in Alaska                                                               
are the most expensive in the  world, but that does not mean that                                                               
it has  the elite healthcare  services one would expect  with the                                                               
highest costs.  He thanked  the individuals  who were  willing to                                                               
testify  on the  bill and  acknowledged that  some people  may be                                                               
reluctant to come forward because  of the larger players involved                                                               
in  this  issue.  This  is  the  fifth  year  he  has  introduced                                                               
legislation to  repeal certificate of  need (CON) and  his office                                                               
has heard from many who  fear losing hospital privileges or worry                                                               
that it  would hurt their  relationship with providers  that have                                                               
SENATOR  WILSON  stated  that Senate  Bill  26  repeals  Alaska's                                                               
certificate of  need (CON) program but  delays implementation for                                                               
three years to  ease the transition. His office  has examined the                                                               
historical  and  current arguments  for  continuing  CON but  the                                                               
evidence heavily  favors elimination.  Alaska's CON  program does                                                               
not provide  the economic justification  to deprive  consumers of                                                               
the  benefits of  a more  open  market. He  said healthcare  will                                                               
always  be heavily  regulated and  it  should be  to ensure  that                                                               
doctors are properly trained and licensed.                                                                                      
SENATOR  WILSON   highlighted  that   the  intent   in  federally                                                               
mandating  CON  in  1974  was to  cut  down  on  inflation-driven                                                               
healthcare costs. At  the time, reimbursement services  were on a                                                               
cost-plus basis,  which provided  strong incentive  for providers                                                               
to  expand their  healthcare facilities.  When the  reimbursement                                                               
system  shifted  to  fee  for  service,  the  federal  government                                                               
determined  the   CON  program   did  not   effectively  restrain                                                               
healthcare costs  and mandated  its repeal  in 1987.  Since then,                                                               
many states  have either repealed  their CON  programs altogether                                                               
or modified them  to cover just one or two  services. He deferred                                                               
further introduction of SB 26 to his staff, Gary Zepp.                                                                          
1:36:09 PM                                                                                                                    
GARY   ZEPP,   Staff,   Senator  David   Wilson,   Alaska   State                                                               
Legislature, Juneau,  Alaska, stated that  SB 26 seeks  to repeal                                                               
Alaska's certificate  of need program and  directs the Department                                                               
of Health and Social Services  (DHSS) to develop regulations once                                                               
the bill  is enacted.  The bill  delays implementation  for three                                                               
years  to allow  time for  businesses and  banks to  recoup their                                                               
investments in  healthcare facilities  and services.  The passage                                                               
of  SB  26  will  not  change  the  oversight  of  licensing  and                                                               
accreditation.  Additionally, an  entity  that  has existing  CON                                                               
activity  at the  time  of  repeal would  remain  subject to  CON                                                               
conditions. SB 26 has an effective date of July 1, 2024.                                                                        
MR.  ZEPP said  SB  26 will  not magically  fix  all of  Alaska's                                                               
healthcare challenges but it is a  large piece of the puzzle. The                                                               
reasons to  repeal CON  include price  and quality,  allowing new                                                               
entrants,   encouraging  innovation   and  technology,   removing                                                               
barriers,  allowing   healthcare  competition,   slowing  medical                                                               
tourism  to  keep  healthcare  dollars  in  the  Alaska  economy,                                                               
increasing employment  opportunities in healthcare by  allowing a                                                               
free  market, and  providing  additional  options for  healthcare                                                               
He  said  the  current  CON provides  exemptions  for  just  some                                                               
providers  and  allows  healthcare   venders  to  manipulate  and                                                               
circumvent  the process,  but opening  Alaska for  all businesses                                                               
would allow  opportunities for  fair and  open competition  and a                                                               
level playing field.                                                                                                            
1:38:38 PM                                                                                                                    
MR. ZEPP began  his PowerPoint presentation giving  thanks to the                                                               
valued healthcare  providers in Alaska's communities.  He said SB
26 seeks  to repeal  Alaska's CON  program laws  but it  does not                                                               
intend  to  disrespect  or   minimize  how  important  healthcare                                                               
providers are  to Alaskans. He  gave particular thanks  for their                                                               
work during the COVID-19 pandemic.                                                                                              
MR. ZEPP related  his intention to focus on just  a few slides in                                                               
the presentation to  allow time for the  invited testimony. These                                                               
national   experts   include  healthcare   economists,   national                                                               
researchers,  and  healthcare providers  who  have  the data  and                                                               
experience  in healthcare  to support  the repeal  of the  Alaska                                                               
certificate  of need.  After more  than  40 years  of study,  the                                                               
research shows  that states that do  not have a CON  program have                                                               
better quality  of care, improved healthcare  outcomes, increased                                                               
access  to  healthcare  providers,   and  better  access  to  new                                                               
technologies compared to states that still have a CON program.                                                                  
MR. ZEPP  highlighted that  the states  that have  repealed their                                                               
CON laws  entirely, represent over  40 percent of  the population                                                               
or  about 131  million Americans.  These states  have functioning                                                               
healthcare  markets  and research  shows  that  the cost  of  CON                                                               
exceeds the benefits, particularly for consumers.                                                                               
1:40:15 PM                                                                                                                    
MR. ZEPP  displayed the map on  slide 4 and noted  that the topic                                                               
of CON  laws in Florida and  Georgia came up during  a hearing in                                                               
the  previous  committee. He  clarified  that  those states  have                                                               
partially repealed their  CON programs. He turned to  slide 5 and                                                               
explained  that it  is a  summary of  the legislative  history of                                                               
Alaska's CON program. [The first law  was enacted in 1976 and the                                                               
last was in 2004.]                                                                                                              
He paraphrased excerpts  of slide 7 about why  to repeal Alaska's                                                               
CON. The slide read as follows:                                                                                                 
     The  Federal Trade  Commission, the  Dept. of  Justice,                                                                    
     the Mercatus  Center, and  many other  researchers have                                                                    
     studied this  issue for  over 4  decades and  some have                                                                    
     even testified  here in our legislature  supporting the                                                                    
     repeal of the CON.                                                                                                         
     Here are  a few  points (data  & research  derived from                                                                    
     the various studies) as to why we should repeal CON:                                                                       
     ? CON programs limit  the introduction and expansion of                                                                    
     medical services  & equipment,  rehabilitation centers,                                                                    
     nursing home beds, and medical imaging technologies;                                                                       
       Rural hospital closures: The  data and research shows                                                                  
     that the  closures are related  to Low  Patient Volume,                                                                    
     Challenging  Payer Mix  (Medicare &  Medicaid patients,                                                                    
     which  pay  less),  Geographic Isolation  (located  far                                                                    
     away   from   population    centers),   and   Workforce                                                                    
     shortages.  None of  this has  to do  with whether  you                                                                    
     have a CON or not;                                                                                                         
         High-quality  health   care:   Data  and   research                                                                  
     indicates  that  deaths  from  treatable  complications                                                                    
     following surgeries  and mortality from  heart failure,                                                                    
     pneumonia  and heart  attacks are  significantly higher                                                                    
     in CON states than non-CON states; and,                                                                                    
        Charity  care:  Studies have  shown,  there  is  not                                                                  
     evidence  that charity  care is  higher  in CON  states                                                                    
     than non-CON states.                                                                                                       
        Racial Disparities:  According  to research,  racial                                                                  
     disparities seems to increase in CON states.                                                                               
MR.  ZEPP mentioned  the Emergency  Medical Treatment  and Active                                                               
Labor Act (EMTALA,  otherwise known as charity  or indigent care.                                                               
He said there  is no evidence that charity care  is higher in CON                                                               
states versus  non-CON states. According to  the American College                                                               
of Emergency Room Physicians, emergency  care in the U.S. is just                                                               
2  percent of  all medical  costs. He  pointed out  that the  CON                                                               
concept from  the 1970s is  to charge private insurers  2-3 times                                                               
the amount  for services versus  uninsured patients  so hospitals                                                               
can offset  that uncompensated care. In  addition, the Department                                                               
of  Health  and  Social  Services (DHSS)  allocates  the  federal                                                               
Disproportionate  Share  Hospital  (DSH)  Payments  to  hospitals                                                               
throughout the state  to help with uncompensated  care. The state                                                               
distributed $17.6 million  in FY2017, $25 million  in FY2019, and                                                               
$20.8 million in FY2020.                                                                                                        
He said  proponents also  talk about  the increased  Medicare and                                                               
Medicaid costs  if CON is repealed,  but there is no  evidence to                                                               
support that  claim. He pointed  out that the  healthcare markets                                                               
for the 131 million Americans  living in states that repealed CON                                                               
function just fine.                                                                                                             
1:43:25 PM                                                                                                                    
SENATOR  WILSON pointed  out  that  Alaska has  one  of the  most                                                               
profitable   healthcare    margins   in   the    world.   Average                                                               
profitability  is  about  6.9  percent   whereas  a  hospital  in                                                               
Anchorage  has a  20 percent  profit margin  and his  hospital in                                                               
MatSu  has a  profit  margin  of over  24  percent.  He said  the                                                               
committee will hear  anecdotal data but he can attest  that SB 26                                                               
is one of the most researched  and heavy in empirical data of any                                                               
bill in  the legislature today.  Volumes speak to  the importance                                                               
of repealing CON, he said.                                                                                                      
MR.  ZEPP  highlighted that  the  Federal  Trade Commission,  the                                                               
Department  of  Justice,  the Mercatus  Center  and  others  have                                                               
testified in this committee to support the repeal of CON.                                                                       
1:44:44 PM                                                                                                                    
MR. ZEPP paraphrased the text on Slide 8 that read as follows:                                                                  
      Why would Alaska's health care providers not want to                                                                      
        open Alaska to a free market? Here are some data                                                                        
     examples to think about:                                                                                                   
   head2right Alaska ranks the highest in the nation at $11,064 per                                                             
     capita in 2014; (Medicaid & Medicare data was last released                                                                
     in June 2017, which covers 1991-2014. The next release is                                                                  
     scheduled for 2022);                                                                                                       
   head2right The total Anchorage consumer price index was up 77%                                                               
     from 1991- through 2017, but the medical care part of                                                                      
     the index was up 210% - Nearly three times faster than                                                                     
     the prices in the overall CPI;                                                                                             
        • Hospital margin averages in Alaska run at 15.6%,                                                                      
          Anchorage margins average 20.6%, that's 5% higher                                                                     
          than San Francisco, which is the next highest in                                                                      
          the country;                                                                                                          
        • Hospital Margins can be as much as 223 % higher                                                                       
          than the lower 48 states; and,                                                                                        
        • Medicare Fee Schedule for Diagnostic Radiology                                                                        
          (imaging) in Alaska increased from 491% in 2014                                                                       
          to 533% in 2016 (percentage above the average                                                                         
          reimbursement rate).                                                                                                  
MR.  ZEPP reported  that 25  jurisdictions suspended  or loosened                                                               
CON  requirements during  the COVID-19  pandemic. This  increased                                                               
hospital bed  capacity and freed necessary  equipment. He pointed                                                               
out that  CON regulations were  suspended from March 31,  2020 to                                                               
February  15, 2021.  These  laws and  regulations  are touted  as                                                               
necessary for  health and  safety but  their suspension  for more                                                               
than 10 months seemed to work  just fine. It begs the question of                                                               
why are CON laws needed.                                                                                                        
1:46:11 PM                                                                                                                    
MR. ZEPP stated,                                                                                                                
     We  believe in  a  free market  economy where  Alaskans                                                                    
     decide  which products  and services  will succeed  and                                                                    
     which  ones will  fail. We  believe  in private  sector                                                                    
     businesses   and  local   control   of  resources   and                                                                    
     property.  We  believe  that Alaskan  consumers  should                                                                    
     have  the choice  on selecting  a healthcare  provider.                                                                    
     This  creates competition  and assures  that businesses                                                                    
     have to compete for your hard-earned dollars.                                                                              
He asked  the committee to  consider the  increased opportunities                                                               
if fewer Alaskans  had to seek medical care out  of state because                                                               
of the high cost of healthcare  in the state. He pointed out that                                                               
the  Alaska  economy is  losing  those  dollars. For  businesses,                                                               
repealing CON will reduce the  highest line item on their balance                                                               
sheet,  healthcare. He  said  over 40  percent  of businesses  in                                                               
America are self-insured because  third-party insurance costs too                                                               
much.  He  emphasized  that  CON  has  distorted  the  healthcare                                                               
market, which  does not benefit  Alaskans or  healthcare workers.                                                               
He asked  the committee  to support SB  26 and  repeal government                                                               
control of healthcare options in Alaska.                                                                                        
1:47:53 PM                                                                                                                    
CHAIR COSTELLO  advised that she  would take  committee questions                                                               
before the  invited testimony. She  mentioned the  legislation to                                                               
retroactively continue  the disaster declaration and  continue it                                                               
to  December 31,  2021. She  said she  understood that  hospitals                                                               
want to continue operating under  the disaster declaration status                                                               
but Mr.  Zepp indicated  that the CON  laws and  regulations were                                                               
waived in 2020. She asked the sponsor if that was correct.                                                                      
SENATOR WILSON confirmed  that the CON laws  and regulations were                                                               
waived for 11 months.                                                                                                           
CHAIR  COSTELLO summarized  that if  the disaster  declaration is                                                               
extended, CON would essentially be  repealed, but if the disaster                                                               
declaration ended  on February 15, 2021  and SB 26 were  to pass,                                                               
there would  be three  years to transition  to no  certificate of                                                               
need. She asked the sponsor if he agreed.                                                                                       
SENATOR  WILSON answered  yes, but  if  the disaster  declaration                                                               
bill  that is  currently in  the Senate  Rules Committee  were to                                                               
pass, either  the commissioner  or governor  would need  to waive                                                               
the CON regulations again.                                                                                                      
CHAIR  COSTELLO  asked if  waiving  the  CON regulations  for  11                                                               
months had any negative effects.                                                                                                
SENATOR WILSON said  he was aware of just  one application during                                                               
that  timeframe and  it  went through  the  regular process.  His                                                               
research found that  businesses that had the  opportunity to come                                                               
to Alaska during  that 11 month period did not  come when the CON                                                               
regulations were waived.                                                                                                        
CHAIR  COSTELLO   referenced  his  statement  that   the  federal                                                               
government mandated  states repeal  their CON  laws and  asked if                                                               
that  was done  through  legislation, resolution,  or some  other                                                               
1:51:27 PM                                                                                                                    
SENATOR WILSON  said CON  was mandated in  1974 in  the [National                                                               
Health Planning and Resources Development  Act] and then repealed                                                               
in 1987.                                                                                                                        
SENATOR  GRAY-JACKSON  summarized  that  the  federal  government                                                               
mandated that all states have CON programs before 1987.                                                                         
SENATOR WILSON agreed.                                                                                                          
SENATOR GRAY-JACKSON asked  if it was a  state's decision whether                                                               
or not to continue their CON program.                                                                                           
SENATOR WILSON answered yes.                                                                                                    
MR. ZEPP  added that when  the CON  law was enacted,  the federal                                                               
government tied federal  funding to states to the  passage of CON                                                               
laws.  This  resulted in  every  state  but Louisiana  passing  a                                                               
certificate of need law.                                                                                                        
SENATOR  GRAY-JACKSON  summarized  that  states  that  wanted  to                                                               
receive federal funds had to pass a CON law.                                                                                    
MR. ZEPP replied that is correct.                                                                                               
SENATOR GRAY-JACKSON asked for a  one sentence explanation of how                                                               
a CON program contributes to higher health care costs.                                                                          
MR. ZEPP suggested  that she imagine what the  price of groceries                                                               
would be if the government  mandated that the greater Juneau area                                                               
could  have  just  one  grocery  store.  The  principle  is  that                                                               
limiting supply causes costs to rise.                                                                                           
SENATOR GRAY-JACKSON commented that it's supply and demand.                                                                     
1:53:31 PM                                                                                                                    
SENATOR MICCICHE said he appreciates  the bill and discussion but                                                               
he believes there should be  some discussion about the reason for                                                               
a  certificate  of   need  program.  He  posited   that  CON  was                                                               
particularly  important  in  Alaska   when  it  passed  initially                                                               
because  it encouraged  construction  of a  facility and  ensured                                                               
there  were  not  too  many competing  interests.  He  cited  the                                                               
example of  the hospital in  his community evaluating  whether or                                                               
not to  expand. He said  this may  have been more  important when                                                               
Alaska was  much younger,  but he  would like  to hear  about the                                                               
history, purpose, and value of CON as initially envisioned.                                                                     
SENATOR WILSON  said he  would not  go into  the history,  but he                                                               
would  point out  that hospitals  do  not make  money from  their                                                               
emergency departments  because they are required  to treat EMTALA                                                               
or indigent  care patients. They  rely on their other  surgery or                                                               
ambulatory services to  offset those losses and  they fear losing                                                               
those  profit margins  to competing  facilities. He  also pointed                                                               
out the  loopholes in CON  that allow ambulatory  surgery centers                                                               
under  a  dollar threshold    that  are privately  owned  through                                                               
physician funding or  the exempt Indian Health  Service (IHS). To                                                               
Senator  Micciche's  example  about  the  benefit  of  CON  to  a                                                               
hospital in  his community looking  at expanding,  he highlighted                                                               
that  today a  hospital in  Anchorage could  spend $2  million to                                                               
fight that CON  effort because they may want to  expand into that                                                               
community. He  said that is not  how the open market  should work                                                               
here in Alaska.                                                                                                                 
1:58:35 PM                                                                                                                    
MR. ZEPP  added that  healthcare providers will  say they  do not                                                               
like CON  if they  cannot open  facilities, but  they do  like it                                                               
when it  blocks new  facilities and  protects the  incumbents. He                                                               
said it  should be  like any other  industry where  the economics                                                               
drive the free market.                                                                                                          
CHAIR COSTELLO  turned to invited  testimony. She  introduced Dr.                                                               
Matthew  Mitchell  from the  Mercatus  Center  and asked  him  to                                                               
describe the Center and who provides its backing.                                                                               
2:00:01 PM                                                                                                                    
DR.  MATTHEW  MITCHELL,  Economist and  Senior  Research  Fellow,                                                               
Mercatus Center, George Mason University,  stated that the Center                                                               
is  a  nonprofit research  center  that  is funded  primarily  by                                                               
donations from individuals and foundations  and about one percent                                                               
from corporations.  The research and  funding arms of  the Center                                                               
are separated  by design so he  does not have many  details about                                                               
the  funding. This  allows the  researchers to  select their  own                                                               
topics and come to their own conclusions.                                                                                       
He said the  federal government at one time  encouraged states to                                                               
adopt  CON  laws  through  federal  matching  funds.  The  effort                                                               
started in 1974  with the National Health  Planning and Resources                                                               
Development  Act, but  when evidence  showed that  CON laws  were                                                               
failing to  achieve their goals,  a bipartisan  Congress repealed                                                               
the federal  mandate. Since  then about  15 states  have repealed                                                               
their  CON programs  and several  others  partially repealed  the                                                               
law.  Currently,  about  40  percent   of  Americans  live  in  a                                                               
diversity  of  states  that  have  no  certificate  of  need  for                                                               
healthcare. Health  economists for  several decades  have tracked                                                               
outcomes in these non-CON states  and compared them to CON states                                                               
like  Alaska.   Controlling  for  observable   and  nonobservable                                                               
factors,  the research  concluded that  CON laws  do not  achieve                                                               
their stated goals. In fact, they  seem to make matters worse. In                                                               
states that have repealed their  CON laws, patients enjoy greater                                                               
access to care, higher quality of care, and lower cost care.                                                                    
DR. MITCHELL  described the  data on  access as  overwhelming. In                                                               
non-CON  states, controlling  for other  factors, there  are more                                                               
hospitals  per  capita, more  surgery  centers  per capita,  more                                                               
rural  hospitals,  more  rural  ambulatory  surgery  centers  per                                                               
capita, and  more hospital beds,  even during the  pandemic. They                                                               
found that  states that had repealed  their CON laws a  while ago                                                               
were  in a  better position  to  handle the  pandemic than  those                                                               
states that temporarily suspended  their CON laws. Non-CON states                                                               
have more  dialysis clinics,  patients do not  have to  travel as                                                               
far  to obtain  care, and  there are  smaller disparities  in the                                                               
provision of care to communities of color.                                                                                      
On average  and controlling for  other factors, he  said patients                                                               
tend to  receive higher  quality of care  in non-CON  states. For                                                               
example, one  study found  that nursing  home patients  were less                                                               
likely to  be physically  restrained and  more likely  to benefit                                                               
from higher  staffing ratios. Another  study found  that patients                                                               
in non-CON  states experienced lower mortality  rates after heart                                                               
attacks, heart  failure, and  pneumonia. Readmission  after heart                                                               
attacks  and heart  failures were  lower and  patients were  less                                                               
likely to die from post-surgery  complications. Yet another study                                                               
found that all-cause  mortality is about 5 percent  lower in non-                                                               
CON  states.  He highlighted  that  payers  also spend  less  per                                                               
procedure and per patient in non-CON states.                                                                                    
DR.  MITCHELL stated  that the  best option  in terms  of access,                                                               
quality,  and cost  seems  to  be to  eliminate  the CON  program                                                               
altogether. Short  of full repeal,  he suggested  Alaska consider                                                               
reforms that  other states have  adopted. For example,  the state                                                               
might eliminate  CONS that  restrict access  to services  used by                                                               
vulnerable populations  such as  psychiatric services,  less used                                                               
services such as  renal failure and radiation therapy,  or to low                                                               
cost modes of care such as ambulatory surgery centers.                                                                          
He mentioned  the options  to ease  the administrative  burden of                                                               
CON  laws.  For   example,  Alaska  might  reduce   fees  in  the                                                               
application process or require incumbents  to pay the cost of the                                                               
application if they are unsuccessful  in challenging an entrant's                                                               
application. He  said it is the  incumbent's role to block  a new                                                               
entrant's CON  application and  in part  is why  CON laws  are so                                                               
suspect  for economists  and antitrust  authorities  in the  U.S.                                                               
Department  of  Justice and  the  Federal  Trade Commission.  For                                                               
decades, those  agencies have  taken the  position that  CON laws                                                               
are anti-competitive and harmful to consumers.                                                                                  
DR.  MITCHELL  suggested that  the  CON  criteria could  also  be                                                               
changed. For  example, a CON  application should not  be rejected                                                               
to   prevent  duplicative   services  because   that  essentially                                                               
guarantees  a  monopoly  of the  local  market.  Finally,  policy                                                               
makers   could  consider   options   that   would  increase   the                                                               
transparency of  the CON program  and make  legislative oversight                                                               
easier. For  example, the  board could  be required  to regularly                                                               
disclose its  CON approval  rates and  the share  of applications                                                               
opposed by  competitors. Or  the board could  be required  to ask                                                               
applicants to  estimate their costs to  apply for a CON  and then                                                               
regularly report the numbers to the public.                                                                                     
2:06:58 PM                                                                                                                    
DR. MITCHELL emphasized that the  bulk of evidence conducted over                                                               
several  decades  by medical  economists  suggest  that the  best                                                               
option  in terms  of  access,  quality, and  cost  would be  full                                                               
repeal. This  is based on  the experience  of the 40  percent who                                                               
work,  live, and  seek  care  in states  that  do  not require  a                                                               
certificate of need for healthcare.                                                                                             
SENATOR STEVENS  asked him to  talk about states that  have fully                                                               
repealed  their CON  laws and  those  that adopted  a partial  or                                                               
stepped approach to repeal.                                                                                                     
DR MITCHELL  replied the most  common stepped approach  to appeal                                                               
is  to  eliminate  specific CONs.  For  example,  West  Virginia,                                                               
Florida, Indiana,  and Ohio  retained a few  versions of  CON for                                                               
things like  nursing homes. Another  popular approach is to  do a                                                               
full  repeal over  a specific  time. Indiana  did that  through a                                                               
stepped approach  over five years.  Another possibility  would be                                                               
to direct  the CON board to  approve an increasing number  of CON                                                               
applications each year. He said he  was not aware of a state that                                                               
had  done that  but it  would seem  to be  a way  to remove  some                                                               
hesitancy about a full repeal.                                                                                                  
CHAIR COSTELLO invited Dr. Bryan to provide her testimony.                                                                      
2:09:51 PM                                                                                                                    
DR.   DARCY  BRYAN,   Practicing  Physician;   Senior  Affiliated                                                               
Scholar,   Mercatus  Center   George  Mason   University,  stated                                                               
agreement with the previous testimony  that a diversity of states                                                               
have  repealed their  CON  laws  since 1987.  She  said the  main                                                               
purpose of certificate of need has  nothing to do with quality or                                                               
diversity  of  choice  for   patients  or  healthcare  providers.                                                               
Rather, it is about a  committee determining whether a healthcare                                                               
service is economically valuable.                                                                                               
DR. BRYAN  advised that  her testimony would  mostly be  from the                                                               
perspective of  a practicing physician  who works  with hospitals                                                               
and  surgery centers.  She  said there  is  strong evidence  that                                                               
states without CON have 30  percent more hospitals per capita, 14                                                               
percent  more ambulatory  surgery centers,  and more  hospice and                                                               
dialysis  centers.  There  is also  good  evidence  that  quality                                                               
improves  through  competition  and   diversity  of  options  for                                                               
DR  BRYAN   said  she  has   practiced  in  states   that  either                                                               
significantly reduced  or eliminated  their CON laws  entirely so                                                               
she  can testify  that  she has  had the  ability  to direct  her                                                               
patients  to the  surgery  center or  hospital  that she  thought                                                               
would  provide  the best  level  of  care  for their  surgery  or                                                               
condition.  She  has  held multiple  hospital  privileges,  which                                                               
provided flexibility  in her decision-making  and enabled  her to                                                               
have  a significant  voice in  medical staff  meetings. She  said                                                               
healthcare administrators  are primarily  business men  and women                                                               
whose job is  to advocate for the success of  the institution for                                                               
which they  work. Physicians  are granted  permission to  work in                                                               
their  facility  and   in  turn  the  facilities   reach  out  to                                                               
physicians hoping  that they will bring  their patient population                                                               
to the facility for healthcare  and referrals. In turn, providers                                                               
wish  to practice  in a  facility that  will provide  quality and                                                               
patient satisfaction.  This reflects well on  them professionally                                                               
and their ability  to make certain their patients  are well cared                                                               
DR. BRYAN  offered her  perspective that  practicing in  a region                                                               
with  a monopoly  generally leads  to an  administration that  is                                                               
resistant to  change in investing  in terms of quality  and care.                                                               
She said you can imagine if  you're the only surgery center and a                                                               
provider  wants  you  to  buy a  particular  piece  of  expensive                                                               
operative  equipment  that  is  shown  to  have  better  outcomes                                                               
surgically but is  less "cost effective" than a  cheaper piece of                                                               
equipment. The  surgery center  can refuse  and the  provider has                                                               
nowhere else  to go. She said  she has seen doctors  advocate for                                                               
new equipment  purchases with the  ability to say they  would not                                                               
operate in a surgery center or  hospital that was not amenable or                                                               
responsive  to  what  the doctor  recommended.  She  offered  her                                                               
perspective that  advocacy is an  empowerment for  physicians and                                                               
much  more effective  in a  competitive environment  in terms  of                                                               
purchasing  new   equipment  to  improve  operating   room  nurse                                                               
staffing ratios and quality metrics.                                                                                            
2:14:24 PM                                                                                                                    
DR.  BRYAN  highlighted  that the  relatively  new  phenomena  of                                                               
hospitals  purchasing physician  practices increased  128 percent                                                               
from 2012 to  2018. This makes it unlikely that  a physician in a                                                               
community  that  has  just  one   hospital  would  challenge  the                                                               
hospital's  quality metrics,  staffing,  or equipment  purchases.                                                               
Leaving  town is  a more  likely option.  She offered  her belief                                                               
that  it  disempowers  healthcare  providers  to  have  just  one                                                               
hospital or surgery center in a community.                                                                                      
DR. BRYAN said  her last point is that the  COVID-19 pandemic was                                                               
completely  predictable but  nobody did  predict it  in terms  of                                                               
setting up adequate  ICUs or hospital beds. It is  clear that the                                                               
US  lacks  flexibility  in  healthcare supply  to  respond  to  a                                                               
disaster.  She believes  more pandemics  should  be expected  and                                                               
healthcare providers  should have  more freedom at  the community                                                               
level to  make decisions  about what  they need  in terms  of ICU                                                               
beds, ventilators,  hospital beds. Having to  run these decisions                                                               
through  an  administrative  bureaucracy  before  moving  forward                                                               
hinders a quick  and flexible response to patient  care. She said                                                               
she  is essentially  saying that  CON laws  are an  impediment to                                                               
physicians striving  to provide the  highest quality of  care for                                                               
their patients  at affordable  prices. CON laws  also lead  to an                                                               
inability  and  lack  of  flexibility  to  respond  to  impending                                                               
healthcare disasters.                                                                                                           
2:16:56 PM                                                                                                                    
CHAIR COSTELLO  noted that she mentioned  that healthcare quality                                                               
improves  without certificate  of  need laws  and  asked how  she                                                               
measures quality.                                                                                                               
DR. BRYAN  replied the  metrics are  the morbidity  and mortality                                                               
rates.   For   example,   preventative   post-operative   deaths.                                                               
Statistically, surgery  has a recognized  mortality rate  and you                                                               
can compare those  rates across hospitals to see  how one patient                                                               
population  performs  post-operatively   in  a  certain  hospital                                                               
versus another.  In the  field of obstetrics,  she has  seen high                                                               
cesarean  section rates  versus other  hospitals that  have lower                                                               
rates of operative  deliveries, blood loss, loss  of life through                                                               
pre-eclampsia, or other preventable problems.                                                                                   
SENATOR STEVENS asked  if it is possible to  compare morbidity in                                                               
CON  hospitals  versus  non-CON  hospitals  during  the  COVID-19                                                               
DR. BRYAN  said she knows of  studies that show that  states with                                                               
CON laws have statistically higher  mortality rates. She deferred                                                               
further comment to Dr. Mitchell.                                                                                                
2:19:06 PM                                                                                                                    
DR. MITCHELL reported that  three healthcare economists conducted                                                               
a  study called  the  "Certificate of  Need  Laws and  Healthcare                                                               
Utilization  during  the  COVID-19  Pandemic."  They  found  that                                                               
during  the  pandemic, there  were  higher  rates of  septicemia,                                                               
diabetes,   chronic   lower   respiratory   disease,   influenza,                                                               
pneumonia, and  Alzheimer's disease in CON  states versus non-CON                                                               
states. The states with CON  laws also had higher COVID-19 deaths                                                               
during the pandemic.                                                                                                            
CHAIR COSTELLO asked him to send  the study or point to where the                                                               
committee could find it.                                                                                                        
SENATOR MICCICHE expressed  interest in seeing the  data that Dr.                                                               
Mitchell  and  Dr. Bryan  referenced  and  restated his  original                                                               
question. Why was there CON originally?                                                                                         
CHAIR COSTELLO invited Dr. Singer  to testify and to mention what                                                               
the Cato Institute is and how it receives its funding.                                                                          
2:21:48 PM                                                                                                                    
DR. JEFFREY SINGER, Senior Fellow  in Health Policy Studies, Cato                                                               
Institute,  Washington,  DC,  stated  that  the  Institute  is  a                                                               
nonpartisan  public policy  research institute  that receives  no                                                               
government  funding.  The  majority  of its  funding  comes  from                                                               
individual donors. He added that he  is also a general surgeon in                                                               
private practice in Phoenix, Arizona.                                                                                           
DR.  SINGER said  he  appreciates the  opportunity  to offer  his                                                               
perspective  on  certificate  of  need  laws.  Responding  to  an                                                               
earlier   question,  he   related  that   in  the   early  1970s,                                                               
Connecticut  and New  York experimented  with CON  laws with  the                                                               
idea  that  reducing  healthcare  facilities  would  help  reduce                                                               
overall healthcare costs. In 1974,  the federal government passed                                                               
a  law to  incentivize  states  to adopt  CON  laws by  providing                                                               
funding.  It has  been  more than  three  decades since  Congress                                                               
repealed incentive, but  CON laws still exist  to varying degrees                                                               
in 38 states.                                                                                                                   
He described  CON laws as  a classic example of  central planning                                                               
that  is heavily  influenced by  incumbent healthcare  providers.                                                               
State   healthcare   systems   are   unable   to   adjust   their                                                               
infrastructure  rapidly to  meet the  changing demands  of public                                                               
health emergencies. Despite being  ineffective, states still have                                                               
a variety of  CON laws on the books. For  example, Ohio restricts                                                               
only long-term  care services while Kentucky  restricts more than                                                               
24 different  types of healthcare  facilities. Arizona,  where he                                                               
resides and practices medicine, repealed  all its CON laws except                                                               
for ambulance services in 1990.  The Arizona Hospital Association                                                               
supported that  action and Arizona healthcare  providers have not                                                               
regretted  the  repeal.  By 1990,  California,  Colorado,  Idaho,                                                               
Kansas,  Minnesota,  New  Mexico,   South  Dakota,  Texas,  Utah,                                                               
Wisconsin,  and Wyoming  all repealed  there certificate  of need                                                               
laws.  He   agreed  with  previous  testimony   that  these  laws                                                               
essentially give  monopoly privileges  to existing  hospitals and                                                               
facilities. Further,  established providers  are invited  to give                                                               
testimony when a  new provider petitions for  a certificate. This                                                               
means some  healthcare practices  can openly challenge  the right                                                               
to  exist  of any  practice  that  may  hurt their  bottom  line.                                                               
Indeed,  hospital  administrators  openly admit  that  protection                                                               
against competition due  to CON laws has become  an integral part                                                               
of their business  model. He said they argue that  CON laws allow                                                               
the  hospital  to  generate enough  revenue  to  provide  24-hour                                                               
emergency services  and uncompensated  care, but  physicians also                                                               
provide  24-hour emergency  services and  uncompensated care  yet                                                               
state  professional  organizations  do  not  argue  in  favor  of                                                               
creating a CON requirement before  allowing more doctors, nurses,                                                               
psychotherapists,  physical  therapists  and  others  to  set  up                                                               
practices  in a  state. And  they  would and  should be  publicly                                                               
derided if they  did so. New healthcare  practitioners entering a                                                               
state   may   provide   competition   to   incumbent   healthcare                                                               
practitioners  but  this  has  not  stunted  the  growth  of  the                                                               
healthcare  profession,  he  said.   Instead,  it  has  benefited                                                               
healthcare consumers by increasing choice and access.                                                                           
DR. SINGER said  one of the original purposes of  CON laws was to                                                               
encourage   hospital  substitutes   but   28   states  now   have                                                               
restrictions  on ambulatory  care  services, which  are a  common                                                               
hospital  substitute  that  compete with  traditional  hospitals.                                                               
Long-term care and hospice care  can be offered either in nursing                                                               
homes or  through home  healthcare services.  Comparisons between                                                               
states  with CON  laws  and those  with no  CON  laws shows  that                                                               
hospice expenditures  in states  with CON  laws are  dominated by                                                               
more  costly nursing  homes rather  than  alternatives like  home                                                               
healthcare.  Incumbents often  claim CON  laws reduce  healthcare                                                               
expenditures.  But this  claim runs  counter to  economic theory,                                                               
which  would  predict that  a  supply  restriction will  increase                                                               
prices. While  some may  argue that the  increase in  prices will                                                               
reduce  healthcare  consumption,  the  third-party  payer  system                                                               
insulates  consumers  from the  impact  of  price increases  thus                                                               
having little  impact on  utilization. With  healthcare consumers                                                               
largely insulated  from price  affects, reductions  in healthcare                                                               
expenditures can  only be achieved  by reducing  the availability                                                               
to access to healthcare.                                                                                                        
DR.  SINGER  confirmed  Dr. Mitchell's  report  that  a  Mercatus                                                               
Center review of 20 academic  studies found that CON laws largely                                                               
failed  to achieve  the  goal of  reducing  healthcare costs  and                                                               
concluded that  the overwhelming evidence  was that CON  laws are                                                               
associated with  higher per unit  costs and  higher expenditures.                                                               
He said  governments that embrace  central planning,  fall victim                                                               
to  what   economists  call  the   "Knowledge  Problem."   It  is                                                               
impossible  to   predict  how  many  healthcare   facilities  and                                                               
services  will  be   needed  to  serve  a   growing  and  dynamic                                                               
population. Markets  are the most  accurate and efficient  way of                                                               
evaluating goods  and services. With  the advent of  the COVID-19                                                               
pandemic,  many states  realized that  their CON  laws left  them                                                               
unprepared for  a sudden  surge in demand  for critical  care and                                                               
other  healthcare  services  and  20  states,  including  Alaska,                                                               
suspended  their CON  laws. He  said this  was a  tacit admission                                                               
that CON laws impede the  rapid response of the healthcare system                                                               
to changes  in society. He  suggested that Alaska  lawmakers heed                                                               
the lessons the  public health crises provided and  act to repeal                                                               
CON laws  and rid  the state's  healthcare system  of discredited                                                               
central planning reminiscent of a bygone era.                                                                                   
CHAIR COSTELLO  asked the testifiers  to provide  their testimony                                                               
and materials in writing.                                                                                                       
2:28:47 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on SB 26.                                                                                
DAVID  BALAT, Director,  Right  on  Healthcare Initiative,  Texas                                                               
Public  Policy Foundation,  Austin, Texas  , stated  that despite                                                               
CON's underlying  assumption that  excess capacity  of healthcare                                                               
facilities results  in inflated  healthcare prices,  the findings                                                               
on average are  that this regulation does the  exact opposite. He                                                               
pointed out that it is next to  impossible for a patient to see a                                                               
list of prices for services a  hospital offers even though a 2020                                                               
national  study found  that nine  out of  ten people  believe all                                                               
healthcare  prices should  be disclosed.  Despite  a federal  law                                                               
that requires hospitals to post  their negotiated rates, the rate                                                               
of compliance  for hospitals  in Alaska is  21 percent,  which is                                                               
among the lowest in the nation.  The message clearly is that they                                                               
do  not want  patients to  know the  prices they  negotiated with                                                               
insurers  and that  the negotiated  rates directly  attributed to                                                               
the regulation  that protects them  from competition.  He pointed                                                               
out that  Alaska and 24  other states  suspended CON laws  in the                                                               
wake  of the  COVID-19 pandemic  and emphasized  that maintaining                                                               
this  restrictive law  will continue  to  artificially limit  the                                                               
number  of  providers  by requiring  businesses  to  prove  their                                                               
services are needed.  This is contrary to  a market-based economy                                                               
where  the  customer provides  that  feedback,  not the  existing                                                               
MR.  BALAT  concluded  his  comments  highlighting  that  despite                                                               
Alaska  approving  all  recent  CON  applications,  none  of  the                                                               
terrible things  the hospital association  said would  happen has                                                               
happened. He asked the committee to look favorably on SB 26.                                                                    
2:31:25 PM                                                                                                                    
ED  MARTIN, representing  self,  Sterling,  Alaska, testified  in                                                               
support of  SB 26. He  said quality and  profit do not  always go                                                               
hand-in-hand, free  enterprise and capitalism is  what America is                                                               
about, and healthcare  costs will go down  with more competition.                                                               
He  noted  that  the  evidence   shows  that  centralization  and                                                               
planning has been expensive. He  did not believe the state should                                                               
fear more  free enterprise and  that it  was not necessary  to go                                                               
back to  1965 and figure out  why healthcare costs have  risen so                                                               
dramatically.  He  concluded  his  testimony  by  suggesting  the                                                               
committee move on and get the business done.                                                                                    
2:33:21 PM                                                                                                                    
PATRICK SHIER,  Alaska Membership Representative,  Pacific Health                                                               
Coalition, Wasilla,  Alaska, stated that PHC  assists a coalition                                                               
of more than  50 self-funded health plans to find  the best price                                                               
and  value  in  quality  healthcare.  By  leveraging  competitive                                                               
principles, these  member plans saved  more than $500  million in                                                               
2019. He  stated support for SB  26 and measures that  enlist the                                                               
power of  free markets  in the pursuit  of better  healthcare and                                                               
pricing. He reminded the members  of the 2019 PHC-sponsored Lunch                                                               
and Learn  that featured  the authors  of the  book "Overcharged:                                                               
Why Americans  Pay Too Much  For Healthcare." The authors  made a                                                               
compelling case  that distortions of market  forces almost always                                                               
result in negative outcomes. He  cited the example of the federal                                                               
measure prohibiting the reimportation  of insulation in 1998. The                                                               
effect  was  a  tenfold  increase   in  price.  While  government                                                               
intervention is sometimes warranted,  he said certificate of need                                                               
has outlived its usefulness and  created monopolistic barriers to                                                               
entry in an industry that  is critically valuable to Alaskans. He                                                               
concluded that  repealing CON is  a necessary step  in unraveling                                                               
the many distortions  in the healthcare industry  and helping all                                                               
stakeholders  take a  fresh look  at proving  high quality  cost-                                                               
effective healthcare delivery  in Alaska. He urged  passage of SB
2:35:43 PM                                                                                                                    
WENDY SCHRAG,  Fresenius Kidney  Care, Juneau,  Alaska, Testified                                                               
in opposition  to SB 26.  She advised that FKC  provides dialysis                                                               
services  to about  325 patients  in 11  clinics in  Alaska. They                                                               
support  CON  laws, which  have  established  a long  history  of                                                               
stability  for reputable  dialysis providers  and investments  in                                                               
their  clinics and  equipment. Responding  to previous  testimony                                                               
that  non-CON states  have more  dialysis clinics,  she said  she                                                               
lives in  a non-CON state and  the two dialysis clinics  near her                                                               
house  operate at  50 percent  capacity and  are open  just three                                                               
days  a week.  They are  closed the  rest of  the week.  She also                                                               
noted that  FKC had to  close a new  dialysis clinic in  a nearby                                                               
community when a third dialysis  provider moved in. She explained                                                               
that  dialysis clinics  remain solvent  by balancing  the current                                                               
population  of  needs with  the  expected  growth of  needs.  She                                                               
highlighted that  CON supports access  to care in  outlying areas                                                               
but warned that  rural clinics in Alaska  could potentially close                                                               
or not open  in the first place without CON.  The dialysis clinic                                                               
in  Juneau for  example has  just  19 dialysis  patients but  FKC                                                               
knows it  will maintain  that patient base  because of  CON laws.                                                               
The  home  dialysis  training  in Juneau  had  to  close  however                                                               
because  of low  patient  numbers. She  noted  that the  Soldotna                                                               
clinic  is in  the same  situation. She  warned that  without CON                                                               
laws, providers  may be  reluctant to  enter outlying  areas. She                                                               
reiterated support for CON laws and opposition to SB 26.                                                                        
2:38:39 PM                                                                                                                    
BETHANY MARCUM,  Alaska Policy  Forum, Anchorage,  Alaska, stated                                                               
that  the  Alaska  legislature  and  23  other  states  suspended                                                               
requirements for  some certificates  of need during  the COVID-19                                                               
pandemic. She described  it as the government getting  out of the                                                               
way  to  allow  the  timely   delivery  of  essential  healthcare                                                               
services.  She  said  this  policy should  be  extended  and  the                                                               
requirements for  burdensome CONs  should be repealed  in Alaska.                                                               
Requiring  entrepreneurs  to  prove  their  services  are  needed                                                               
instead of  allowing the free  market to work makes  it difficult                                                               
and expensive  to open new  healthcare facilities. She  said that                                                               
is  hard to  swallow  in  a state  like  Alaska  where there  are                                                               
significant  issues  associated   with  healthcare  access.  Less                                                               
access  means  fewer  facilities and  providers,  which  prevents                                                               
people from  getting the care they  need and it drives  up costs.                                                               
She said CON requirements also  stifle innovation and competition                                                               
by  establishing  a  system of  central  planning  and  cronyism.                                                               
Patients  are left  with higher  costs, lower  quality care,  and                                                               
fewer options.  Furthermore, allowing existing providers  to give                                                               
input on their potential competition  is not in the best interest                                                               
of  consumers. Patients,  providers, and  the free  market should                                                               
instead determine  what new  medical facilities  will open  in an                                                               
area. She said it is time for  Alaska to join the 15 other states                                                               
that have  removed their CON  requirements. There is  support for                                                               
this among Alaska  voters. She concluded that Alaska  has some of                                                               
the most challenging access and  most expensive healthcare in the                                                               
country  and  it is  up  to  the  legislature to  alleviate  this                                                               
2:40:50 PM                                                                                                                    
DR. ALICIA  PLEMMONS, representing self,  Edwardsville, Illinois,                                                               
Testified  in support  of  SB  26. She  related  that  she is  an                                                               
assistant professor at  Southern Illinois University Edwardsville                                                               
and a  research affiliate  of the  Knee Center  for the  Study of                                                               
Occupational Regulation at Saint  Francis University. She advised                                                               
that she is  the author of the study mentioned  earlier about how                                                               
CON  laws affected  mortality during  the COVID-19  pandemic. She                                                               
said she  would not go  into the background  of CON laws  but did                                                               
want to remind the committee that  CON laws affect all aspects of                                                               
healthcare, down to the number of  beds in an ICU. She noted that                                                               
previous  testimony did  not include  the point  that in  Alaska,                                                               
purchases requiring  approval through CON  laws takes from  60 to                                                               
180  days and  the  fees  range from  $2,500  to nearly  $75,000.                                                               
Anytime  during this  process,  competitive healthcare  providers                                                               
can intervene to have the  application denied. In 2019, 35 states                                                               
and the  District of  Columbia had versions  of CON  laws. During                                                               
the  COVID-19  pandemic,  Alaska  was  one  of  the  states  that                                                               
recognized  the need  to let  healthcare purchase  and move  beds                                                               
very quickly. She  and her co-authors analyzed  the legal changes                                                               
using CDC  mortality files and  found that states such  as Alaska                                                               
that  suspended CON  laws that  restricted hospital  beds, saw  a                                                               
significant  reduction in  deaths from  not only  coronavirus but                                                               
also from  other diseases using  similar medical  equipment. This                                                               
included   septicemia,   diabetes,  chronic   lower   respiratory                                                               
disease, influenza, pneumonia,  and advanced Alzheimer's disease.                                                               
She said these  legal changes saved about 26 lives  per week from                                                               
March to the end of June.                                                                                                       
DR.  PLEMMONS said  her testimony  has three  points. First,  CON                                                               
laws  affected  purchasing  during the  pandemic  and  restricted                                                               
healthcare facilities  nationwide from responding to  the demand.                                                               
Second, Alaska  saved lives by  temporarily suspending  CON laws.                                                               
Third,  repealing CON  laws can  avoid these  emergencies in  the                                                               
future by allowing hospitals and  healthcare providers to prepare                                                               
for these  emergencies before they  happen. She  highlighted that                                                               
there  has been  extensive research  on  CON laws  over the  past                                                               
decade and  that dozens of data-driven,  peer-reviewed studies in                                                               
academic  journals have  consistently  found that  CON laws  have                                                               
fallen  short of  their goal  to protect  access to  high quality                                                               
care  in   rural  and   underserved  communities   by  preventing                                                               
competition  that would  otherwise keep  quality high  and prices                                                               
low. She concluded that SB 26  offers an opportunity to do better                                                               
and  put the  lives of  Alaskans first  in the  fight for  better                                                               
CHAIR COSTELLO asked her to send her research to the committee.                                                                 
2:44:23 PM                                                                                                                    
YVONNE  ITO, representing  self, Glenallen,  Alaska, stated  that                                                               
she is  a Doctor of  Social Work  at Crossroad Medical  Center in                                                               
Glenallen and she  was speaking in support of SB  26. She pointed                                                               
out  that it  is already  difficult to  obtain services  in rural                                                               
Alaska and  the CON laws make  it worse. She urged  the committee                                                               
to think  about access  to care  and to do  what is  sensible and                                                               
repeal CON laws.                                                                                                                
SENATOR  MICCICHE  thanked  her  for her  concise  testimony  and                                                               
CHAIR COSTELLO expressed particular  appreciation to the Alaskans                                                               
who were testifying.                                                                                                            
2:46:16 PM                                                                                                                    
SARAH HETEMI, representing self,  Anchorage, Alaska, Testified in                                                               
support of Sb  26. She stated that during  the COVID-19 pandemic,                                                               
Alaska was one of 20 states  that suspended portions of their CON                                                               
laws  to  allow  providers  to  act quickly  to  respond  to  the                                                               
pandemic. She  questioned the reason  for not allowing  this same                                                               
flexibility year  around for various  services. She  said quality                                                               
healthcare should matter regardless  of the healthcare issue. She                                                               
cited a Mercatus  Center study mentioned earlier  that that found                                                               
that CON laws are associated  with fewer services, less access to                                                               
services, and greater racial disparity  in the provision of care.                                                               
She concluded  that she  believes that  repealing CON  laws would                                                               
help  improve  healthcare for  all  Alaskans,  which is  why  she                                                               
supports SB 26.                                                                                                                 
2:48:41 PM                                                                                                                    
JARED  KOSIN,  President  and  CEO,  Alaska  State  Hospital  and                                                               
Nursing Home Association (ASHNA),  Anchorage, Alaska, stated that                                                               
ASHNA  opposes SB  26. They  agree that  problems exist  with the                                                               
current CON program but a wholesale  repeal is not the answer. He                                                               
said  it is  impossible to  respond to  the assertions  that have                                                               
been  made  in  just  two   minutes.  He  pointed  out  that  CON                                                               
regulations  were  waived  during   the  pandemic,  but  ordinary                                                               
capital projects  received government review. He  emphasized that                                                               
no  providers are  asking to  keep  the hospital  beds that  were                                                               
freed up to remain available  on a permanent basis. Regarding the                                                               
free market  argument for  repeal, he  said healthcare  really is                                                               
not  a  free  market.  Hospitals  are  required  to  maintain  an                                                               
emergency  department, they  have a  duty to  treat all  patients                                                               
regardless of ability to pay, and  they must be open 24 hours per                                                               
day, 365 days  per year. By contrast,  ambulatory surgery centers                                                               
do not  have a  duty to  treat and their  hours of  operation are                                                               
discretional. The  point is that  customers are  choosing between                                                               
two totally different products and only  one is subject to a host                                                               
of expensive requirements.                                                                                                      
MR.  KOSIN  said  ASHNA  urges  the  committee  to  look  at  the                                                               
regulatory framework of CON instead of full repeal.                                                                             
CHAIR COSTELLO  urged him  and other  testifiers to  send written                                                               
comments if they would like to respond more fully.                                                                              
2:51:01 PM                                                                                                                    
KAREN  PERDUE, Volunteer  Foundation  Trustee, Foundation  Health                                                               
Partners (FHP), Greater  Fairbanks Community Hospital Foundation,                                                               
Fairbanks, Alaska,  urged the committee  to slow down  and listen                                                               
to  some broader  perspectives  on the  issue  of certificate  of                                                               
need. She  said most states still  have a CON program  and Alaska                                                               
needs one because it  is so rural it does not  have the volume to                                                               
control costs.  She cited  the community  of Fairbanks  trying to                                                               
support  a hospital  system  with a  population  of 100,000.  She                                                               
highlighted that  the robust surgery  center in  Fairbanks gained                                                               
its  status through  the CON  process.  That shows  that the  CON                                                               
process works,  but the  center has  diminished surgeries  at the                                                               
hospital by about 30 percent and  the concern is that other niche                                                               
providers will  take other specialized high-profit  services from                                                               
the hospital.                                                                                                                   
MS.  PERDUE questioned  the reason  for the  indeterminant fiscal                                                               
note and suggested it might be  because the cost would be so very                                                               
high. She  related her  understanding that it  takes the  cap off                                                               
long  term care.  She  explained  that the  state  pays about  80                                                               
percent  of skilled  nursing costs  through  Medicaid and  adding                                                               
long term care beds automatically  adds to that program. When she                                                               
was DHSS  commissioner and a  long term care certificate  of need                                                               
was authorized,  it automatically  added several  million dollars                                                               
to the  state budget. She  acknowledged that there is  a shortage                                                               
of long  term beds in  Alaska but noted  that a long  term policy                                                               
has  been to  try to  have those  services in  the community.  In                                                               
response to the  expert testimony about consequences  of CON, she                                                               
noted that the state has  the least restrictive use of restraints                                                               
in the country.                                                                                                                 
MS.  PERDUE refuted  the material  in  the bill  packet from  the                                                               
Mercatus  Center  that  talks  about  the  additional  facilities                                                               
Alaska  would  have  without  CON. She  pointed  out  that  rural                                                               
hospitals  are just  hanging on  and  questioned where  hospitals                                                               
might be added. She said CON has  done what it was intended to do                                                               
in   managing  healthcare   infrastructure.  She   suggested  the                                                               
committee  ask  the  department what  it  would  cost,  including                                                               
licensing and managing, to add eight  new hospitals and up to 400                                                               
long term care beds.                                                                                                            
MS.  PERDUE  said  her  final  point is  that  this  is  a  tough                                                               
conversation  to  listen  to when  hospitals  performed  so  well                                                               
during the COVID-19  pandemic. She assured the  committee that it                                                               
would not have been possible  to manage the pandemic in Fairbanks                                                               
without a  functioning and vital hospital  system. She emphasized                                                               
that  Foundation  Health  Partners  (FHP)  provided  the  medical                                                               
leadership and  boots-on-the-ground. It  is a  large part  of the                                                               
public health infrastructure in the  community and now is not the                                                               
time to  talk about weakening  capacity. The  conversation should                                                               
instead  be about  how to  strengthen the  system. She  urged the                                                               
committee to hold  SB 26 and do more research  about the benefits                                                               
of keeping CON.                                                                                                                 
CHAIR COSTELLO  advised people who  were unable to  testify today                                                               
to call on Friday or provide their comments in writing.                                                                         
2:57:28 PM                                                                                                                    
RYAN  MCKEE,  State  Director,  Americans  for  Prosperity-Alaska                                                               
(AFP-AK),  Wasilla, Alaska,  testified in  support of  SB 26.  He                                                               
said the  COVID-19 pandemic showed that  preparation is necessary                                                               
and  that much  of the  state was  not prepared  and had  to shut                                                               
down. He  said the effects of  not being prepared were  large and                                                               
if  repealing CON  laws adds  to  preparedness that  will have  a                                                               
positive  affect  throughout  the  state  and  not  just  in  the                                                               
healthcare  sector.  He  also  pointed   out  the  potential  for                                                               
monopolies with  CON laws.  He said many  Alaskans are  forced to                                                               
seek healthcare  treatment outside  the state where  services are                                                               
more  affordable,  but it  should  not  be that  way.  Healthcare                                                               
should  be  affordable  for  all   Alaskans.  He  encouraged  the                                                               
committee to support SB 26.                                                                                                     
CHAIR  COSTELLO stated  that she  would hold  SB 26  in committee                                                               
with public testimony open.                                                                                                     

Document Name Date/Time Subjects
SB 26 CON Power Point - SLAC 4.21.21.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 CON Application Fees and Recent Applications 4.21.21.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Jeffrey Singer.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Karen Petersen.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - C.D. Casscells.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Darcy Bryan.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Jaimie Cavanaugh.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Matthew Mitchell.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Sal Nuzzo.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Angela Erickson.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 Written Testimony - Foundation Health Partners.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - American College of Emergency Room Physicians - EMTALA.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - AK high health care costs - Division of Insurance Rpt - 2012.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - American Medical Association - con-evidence-for-repeal.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - CON Racial Disparities - Health Affairs - 2009.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - Disproportionate Share Hospital Payments - Dept. of HSS.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - The State of Certificate of Need Laws in 2020 - Mercatus Center.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - CON - American Hospital Association - Rural Hospital Closures report-2019.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - Medicaid Disproportionate Share Hospital Funding FY2020 - DHSS.pdf SL&C 4/21/2021 1:30:00 PM
SB 26
SB 26 - Trends_in_Alaskas_Health-Care_Spending - UAA ISER - 2018.pdf SL&C 4/21/2021 1:30:00 PM
SB 26