Scuttlebiz: Georgia Supreme Court upholds state’s most anti-capitalist law

This town has too many Mexican restaurants.

 

Oh, and nail salons. Way too many of those.

And do we really need all those title pawn joints?…

You may agree, you may not. But it doesn’t really matter in free market capitalism – it’s the market that decides when there is “too many” or “not enough” of something.

And the market is never wrong.

If metro Augusta has 67 Mexican restaurants (purely a guess), then 67 is precisely the “right” number because that is what the market will support. If the market decides it wants more choices for chimichangas, the number of may increase. Conversely, if the market is saturated in sopapillas, the number may decline.

But what if you or I had autocratic power to control the marketplace? What if we arbitrarily ruled Augusta has “enough” Mexican restaurants? What if we put a 10-year moratorium on licenses for new nail salons? What if we said title pawn stores could operate only on Washington Road?

The market wouldn’t stand for it. Consumers would demand their elected leaders legislate against heavy-handed meddling in the free market.

Yet, when it comes to the state’s most important business – health care – Soviet-style central planning is very much a reality.

Georgia’s “certificate of need” law gives state regulators, not consumers, a say over what kind of medical services they can receive, where they receive them and who will provide them.

And based on a Georgia Supreme Court decision this past week, the market-distorting CON law is going to be around for a long time.

The case involved two Cartersville doctors who own The Georgia Advanced Surgery Center for Women. The physicians argued they shouldn’t need state permission to add a second operating room to their outpatient center.

The doctors wanted a second operating room to let other surgeons use the facility on days they were busy delivering babies. They said it would help cover the facility’s overhead, and give more physicians and patients more convenient access.

The Georgia Department of Community Health turned down the application, arguing that an additional operating room wasn’t necessary because the existing room wasn’t used every day. And the state’s high court on Oct. 16 said it was essentially OK with that.

The court’s interpretation of the CON law doesn’t change the fact that, from a free market perspective, it is horrible legislation. So horrific, in fact, it should be eliminated.

The free market, not a handful of state employees, should have determined whether a second surgery facility was “necessary.” The two doctors should have been free to risk their capital and reap the rewards – or suffer the consequences – based on the market’s response.

That’s how capitalism works.

But CON laws have hung around because health-care providers are a competition-averse crowd. They try to use the law to hamstring their competition wherever possible. In some instances, obtaining a state certificate of need is like being given government-sanctioned monopoly power.

“Georgia hospitals can still use the certificate of need bureaucracy to veto new options for care,” said Jim Manley, an attorney for the Goldwater Institute, which filed the Cartersville case.

Two of the most contentious battles in local health care history have involved regulators playing market maker: University Hospital’s early 1990s attempt to purchase Trinity Hospital (then known as St. Joseph) and the more recent state selection of Augusta University as Columbia County’s sole hospital operator.

University Hospital’s initial bid for Trinity was stymied 25 years ago, but this year the community-based nonprofit bought the struggling Catholic hospital without protest.

The same can’t be said for the 100-bed AU Medical Center facility planned on 82 acres in Grovetown. The facility is in a holding pattern because Doctors Hospital, which competed for the county CON along with University Hospital, has tied the project up in legal red tape.

The irony is that Columbia County would probably already have a hospital – or two – had the state rescinded its CON when the federal government repealed the mandate in 1986.

Instead, the burdensome CON pitted the three institutions against each other in a politicized winner-take-all contest for the “right” to operate in the state’s most populous and affluent hospital-free zone.

The peculiar process caused a rift in the medical community that didn’t exist before. And it didn’t help that Columbia County leaders – who clearly wanted AU and its high-tech partner, Phillips, to develop Grovetown’s Gateway area – gutlessly punted the decision to Atlanta bureaucrats, who awarded the bid to a fellow state agency and delivered the fait accompli locals wanted all along.

“The state-owned AU Medical Center was chosen as the winner based upon a process that was shaky if not shady at best,” University Hospital CEO Jim Davis wrote earlier this year in an email when he resigned as chairman-elect of the Georgia Hospital Association. The association supports the CON law, Davis doesn’t.

What is most lamentable about the antiquated law is that it has encouraged the state’s health care providers to choose the command-and-control power of the state to exclude competitors rather than win customers over by operating the best and most efficient facilities they can.

If the state regulated Mexican restaurants the way it regulates hospitals, there would only be three places in this town to get a burrito, it would take you a month to order it and the bill would be $162.57 (assuming you met your deductible).

 

CONSUMER CHOICE: The politically handpicked ad hoc committee tasked with recommending one of the three health systems for Columbia County sheepishly turned the decision over to Atlanta bureaucrats.

But had Columbia County residents had been allowed to choose, it’s likely University Hospital would have received the most votes. Patient data shows it already is the county’s hospital of choice.

Medicare discharge rankings complied by health analytics company Dexur show University Hospital is No. 1 in market share in both Richmond and Columbia counties, with a 36.4 percent share in each.

University also is the market leader in Burke (39.5 percent) and McDuffie (47 percent) counties. In Aiken County, its 28.7 percent market share makes it the No. 2 provider behind hometown hospital Aiken Regional Medical Center.

As for service lines, Dexur says University handles the majority of the metro area’s procedures in cardiovascular (51.6 percent); colorectal (52.1 percent); endocrinology (42.6 percent) and spine (58 percent). Trinity, which is now part of University Hospital, leads the market in obesity/bariatric/stomach and duodenal procedures, with a 42.5 percent share.

AU Medical Center ranked first in obstetrics and gynecology (35 percent); oncology and hematology (35.8 percent); and psychiatry and mental disorders (24.3). That last category, according to Dexur, was the only one in which University Hospital was not ranked in the top five.

 

SPEAKING OF CHOICE…: When consumers are given choices in situations where there was none, they often, not surprisingly, go with the previously unavailable option.

That is what happened this year in Columbia County when around 400 families elected to leave their neighborhood-zoned public schools and enroll their kids in the new School for Arts-Infused Learning in Evans.

During last month’s State of the Community Address, Columbia County School Board Chairman David Dekle said new student enrollment, which has averaged between 500 to 600 students per year during the past five years, fell this year to 191 because of the opening of the SAIL charter school.

The school that county school officials fought tooth-and-nail for three years now has 700 students on a waiting list. There also is a waiting list in Richmond County for the Georgia School for Innovation and the Classics, a charter school in Hephzibah that also faced roadblocks from the government-run school system.

With new competitors in the education market, it may serve public schools well to focus on their own classrooms before nitpicking someone else’s, especially in Columbia County, where explosive growth and changing demographics could alter the academic performance and disruption-free environment it has prided itself on for decades.

Dekle noted during the address that more than a third of the county’s 27,000 students now receive a free or reduced-cost lunch. In 2009, the percentage was just over a quarter.

 

SOMEBODY SAY FREE LUNCH? Got a little trick-or-treater in your life? If you take them to area Applebee’s restaurants on Oct. 31, they get a free meal from the kids’ menu with the purchase of each adult entree. Children have to be 12 or younger, so don’t try to pass off your 16 year old as a seventh-grader. That’s just tacky.

 

PAID IN FULL: Augusta tech company MealViewer has been unceremoniously acquired by the division of an Atlanta-based S&P 500 company.

Heartland Payment Systems announced on its website Sept. 21 that startup sofware company has “joined the Heartland family.” MealViewer’s software and digital displays help school systems to better market their lunch menus to boost student participation in the programs.

New Jersey-based Heartland, a division of Global Payment Systems Inc., is a Fortune 1000 payment processing company that offered a competing K-12 nutrition management product.

“MealViewer is a great addition to our family,” Hearland President Terry Roberts said on the site, which features a brief video with MealViewer co-founder Tommy Wafford. “They are one of the most innovative companies in our industry and we’re excited for our teams to come together to provide the best possible solutions and service to our customers.”

Now that Wafford is free from day-to-day management duties, he ought to be able to funnel those innovative ideas toward the Augusta Innovation Zone business incubator concept he and a half dozen other local business leaders pitched for the old Woolworth’s building on Broad Street.

The idea may gain some traction now that Wafford and fellow AIZ backer Deke Copenhaver have more free time on their hands.

 

HEADED FOR THE COAST: Augusta-based managed IT provider EDTS LLC is expanding again, this time in Savannah.

The company and its cybersecurity affiliate, EDTS Cyber, announced this past week they will serve the coast city’s growing economic base through an office in Savannah’s historic downtown district.

EDTS, which earlier this year moved into its three-story headquarters at the Augusta Cyberworks complex at the old Sibley Mill, provides network operations and security services to small and mid-sized businesses.

“Business owners are increasingly aware that their IT systems and business data are at risk in this every changing threat landscape. EDTS CEO Charles Johnson said in a statement. “Many small and mid-sized companies never recover from a major security breach.”

The company’s office will be at 100 Bull St., a four-story mixed-use building at the corner of Bull and Broughton streets.

 

RECYCLING COMPANY GETS NEW LEADER: America’s Remanufacturing Company, a home-grown “reverse logistics” firm that refurbishes, recycles and resells used appliances, has a new face in the administrative offices: David Hogan.

The Augusta native has joined the company as president, serving under founder and CEO Mark Branum, who started the company as a side venture in 2002 to his Branum’s Sewing and Vaccuum Center, which is now owned by Nick Meabon and operates as Augusta Sewing Center.

Hogan, a Georgia Tech grad who served in the Marines before earning an MBA from England’s University of Cambridge, decided to return to Augusta and buy into Branum’s company after his wife took a position as assistant professor of physical therapy at the AU.

“David brings a keen understanding of operations and logistics honed during his time as a captain in the Marines that will enable him to execute the strategic plan, as well as, bolster our leadership team,” Branum said in a statement.

The company takes customer-returned vacuums and other small appliances and repairs them for a discount as refurbished models. Products that can’t be repaired are broken down into their raw materials and recycled.

Branum said the company is moving away from “traditional fee-for-service to partnering with our clients to provide data and analytics” and a “suite of additional services that protect company brands.”

 

WHAT’S YOUR BUSINESS?: If you just got an MBA and wanted to start a business, what would it be? You might be surprised at some of the industries people are researching online.

The folks at Bid-on-Equipment.com, an online marketplace for used industrial equipment, have crunched the numbers on Google search trends to create a list of the most “unusually popular” business opportunities people have explored in their states.

In Georgia, trucking businesses scored inordinately high compared to the national average. In South Carolina, it was clothing businesses.

Dog walking services were notably high outliers in New Jersey and Massachusetts, while breweries were unusually popular Washington state.

“Geography certainly plays a role in viable business opportunities,” the company said. “Budding entrepreneurs in Montana, Wyoming and Colorado researched opening a bar more than other states, perhaps owing to the fact that a bar in a sparsely populated area would have little competition, as opposed to an area that has a bar on every corner.”

That’s the free market at work.

 

Reach Damon Cline at (706) 823-3352 or damon.cline@augustachronicle.com.

 

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