Balancing equity, effectiveness and efficiency in healthcare reform: Lessons from the impact of the termination of Pennsylvania's CON law on the Philadelphia Metropolitan Area market

In 1996 Pennsylvania became one of what are now 14 states to terminate CON requirements. The Philadelphia area healthcare market was dramatically reshaped as the financial decisions of hospitals were now unrestrained by the CON barrier. The number of hospitals doing coronary artery by pass graphs increased from 11 to 21 with only five currently doing more than the 450 procedures per year that CONs previously required as for quality assurance and cost effectiveness purposes. Heart transplant programs have expanded from three to seven with only two currently doing more than the ten per year now required by the Medicare program as a condition of participation. During this same period seven hospitals, most serving predominantly low income communities and most relying on the cross subsidies that a CON franchises provided have closed. Six other hospitals have closed their obstetrical services contributing to a crisis in access for low income families. Two new hospitals in affluent suburban areas that duplicate existing services are in the process of being planned and two for profit exclusively private pay partially physician owned specialty hospitals have opened. On equity, efficiency and effectiveness grounds, the free market that critics of CON advocate, has poorly served the residents of the Philadelphia metropolitan area. The damage in terms of poorer quality, higher cost care has been borne by affluent suburban and indigent inner city residents alike. In the light of the current economic crisis, a variety of alternatives are explored.