How Virginia’s Hospital Licensing Laws Contributed to the Death of a Baby: New at Reason

Virginia’s Department of Health blocked a Roanoke-area hospital from building a NICU because a competitor objected; months later, an infant died there.

From Reason.

"In February 2012, a woman arrived at the emergency room of LewisGale Hospital in Roanoke, Virginia. She was 24 weeks pregnant, but something was very wrong.
Doctors and staff at LewisGale did what they could to save the mother. The infant, born prematurely, died.

Had the baby been born at a different hospital, one with a neonatal intensive care unit, there's a chance that it would have survived. But it had the misfortune to be born at LewisGale, a hospital that had, just months earlier, been told by state officials that it was not allowed to build a NICU because, in the state Department of Health's expert opinion, it was not needed.

In Virginia, and more than 30 other states, hospitals must get special permission from government planners before being allowed to offer new services, like the specialty nursery that may have saved that child's life in 2012. These so-called Certificate of Necessity laws are supposed to balance the interests of hospitals with the needs of the public, but in reality they are fraught with politics and allow special interests to effectively veto unwanted competition—sometimes with tragic consequences.

A Reason investigation relying on public records, legal documents, and interviews with experts on CON laws uncovered one of those tragic consequences.

Eric Boehm writes:

This baby died, at least in part, because bureaucrats in Richmond—acting in accordance with the wishes of LewisGale's chief competitor and against the wishes of doctors, hospital administrators, public officials, and the people of Salem, Virginia—let it happen.
Like many states, Virginia has a Certificate of Public Need (COPN) law requiring hospitals and other medical providers to get special permission from the state government before they are allowed to offer new services, like the specialty nursery that may have saved that child's life in 2012. These COPN licensing processes are supposed to balance the interests of hospitals with the needs of the public, but in reality they are fraught with politics and allow special interests to effectively veto unwanted competition.
In July 2010, two years before the baby died, administrators from LewisGale Medical Center submitted an application to the state Department of Health seeking permission to build a small specialty care nursery service. It was denied. The state's refusal ensured that, sooner or later, some child would face an ugly fate."