PHOENIX — On Tuesday the Goldwater Institute will file a lawsuit against the State of Georgia challenging the state’s medical Certificate of Need law. This law requires health care providers to seek permission from the Georgia Department of Community Health before expanding healthcare practices or buying certain equipment, like MRI machines.

The Institute will represent two Cartersville, Georgia, doctors who were denied permission to expand their outpatient surgery center by adding another operating room and allowing other surgeons to use the facility. The local hospital objected to the competition from the expanded surgery center and fought the application.

Studies have shown surgery centers decrease Medicare costs because they are paid a fraction of what is paid to hospitals for the same services. On average, Medicare pays surgery centers 56% of the amount paid to hospitals for performing identical services. Between 2008 to 2011, surgery centers saved the Medicare program and its beneficiaries $7.5 billion. Studies have also shown that states with certificate of need laws have fewer hospital beds and MRI services, CT scanners, and optical and virtual colonoscopies per capita.

While Certificate of Need laws were supported by the federal government in the 1970s as a way to reduce healthcare costs, the evidence demonstrated the laws did the opposite, they restricted access to care and raised costs. The federal government repealed its Certificate of Need requirement in 1986. The Department of Justice and Federal Trade Commission released a report encouraging all states to repeal their certificate of need laws, calling them a “detriment” to patients.

A bill was introduced to repeal Georgia’s certificate of need law this session, but it did not pass.

The lawsuit will challenge the Certificate of Need law on five separate constitutional grounds, including the state Constitution’s anti-monopoly clause and the federal Constitution’s equal protection guarantee.

Goldwater Institute Release