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Ophthalmologist Sues Over "Unconstitutional" Certificate-of-Need Process

Lawsuit: Iowa's "burdensome" 40-year-old CON process — and intervention from nearby hospitals — has prevented eye surgeon from using his fully equipped surgery center.

Published: June 23, 2017

CON JOB Dr. Lee Birchansky's outpatient surgery center has been dormant since a nearby hospital terminated a rental agreement, at which point the Iowa Supreme Court ruled he required a certificate of need.

An Iowa eye surgeon who has been repeatedly denied a certificate of need has filed a lawsuit contesting the constitutionality of the state's CON regulatory process that has prevented him from using the fully equipped ambulatory surgery center that he built next to his office.

"It is ridiculous that I have an outpatient surgery center that is already built, already equipped and all ready to go, but I have been denied a CON 4 times because established hospitals do not want competition," says Cedar Rapids, Iowa, ophthalmologist Lee Birchansky, MD.

In a complaint filed earlier this month, Dr. Birchansky says Iowa's certificate of need process — and his competitors — has prevented him performing cataract surgeries at his surgical center, which has not been used since the Iowa Supreme Court declared that Dr. Birchansky needed to obtain a CON after a nearby hospital terminated a 7-year rental agreement with the facility in order to build a surgery center of its own.

"This facility is fully equipped, and it's just sitting dormant," says Darpana Sheth, senior attorney with the Institute for Justice, a Washington, D.C.-based firm representing Dr. Birchansky in the suit. "The certificate-of-need requirement is nothing more than protectionist rationale that stifles innovation. Ultimately, it should be patients and doctors, not the government, dictating what medical services are needed."

Dr. Birchansky has had 4 CON applications denied by the state, with a fifth application pending. In the lawsuit, he cites 2 local hospitals that have consistently intervened in his application process. He's asking the federal court to rule the process unconstitutional.

Iowa is one of 34 states with CON requirements, 28 of which have one specifically for outpatient surgery centers. In Iowa's regulatory process, medical professionals must file a letter of intent with the Iowa Department of Public Health, complete an application form and pay a fee up to $21,000 to open a new center. The department must then notify all "affected persons," including would-be competitors, who can testify at a mandatory public hearing. The department must consider 18 non-exhaustive factors when determining whether an applicant receives a CON, including whether established businesses have objected to the application. If the department grants a certificate, the established businesses can legally appeal the grant.

A spokesperson for the Iowa Department of Public Health was unable to comment because the lawsuit is currently under review by the state attorney general's office.

Bill Donahue


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