Entrepreneurs Sue Kentucky Over Law That Kept Them from Providing Home Health Care Business

Dipendra Tiwari wants to provide home health care to refugees in Louisville in a language they understand. But Kentucky won’t let him because it says that service isn’t needed. How can that be? The answer is a government permission slip called a certificate of need.

Nearly 100,000 Nepali speakers have been welcomed to the United States after ethnic tensions forced them out of their homes in the Himalayan country of Bhutan. Thousands of these refugees resettled in Louisville. And, just like anyone else, they need health care as they age. This situation gave Dipendra, a native Nepali speaker, an idea for a valuable service: a home health care agency catering to the refugee population, offering service in their own language. So, last year, Dipendra formed Grace Home Care and paid a $1,000 fee to submit his plan to the state.

That’s when things went wrong. A $2 billion health care conglomerate—Dipendra’s future competitor—stormed in to argue that there was no need for another home health agency. Based on some back-of-the-envelope estimates, and ignoring the need for Nepali-language care that Dipendra was trying to address, Kentucky agreed. It refused to issue a certificate of need and rejected Dipendra’s application.

And that’s exactly how certificates of need are supposed to work. Originating in a long-debunked effort to control costs, in practice, all they do is prevent new businesses from competing with established ones. They are why in Kentucky’s 120 counties, new home health agencies are allowed in only six. They are why Louisville itself has only nine home health agencies for 26,000 patients. And, to be clear, they have nothing to do with ensuring health or safety (which are covered by other laws). Rather, the whole point of current CON laws is to benefit established providers by stifling competition.

But giant health care conglomerates don’t need the government to protect their business. And entrepreneurs shouldn’t lose their shot just because someone else happened to get there first.

That’s why Dipendra has teamed up with the Institute for Justice to challenge Kentucky’s CON requirement for home health agencies in federal court. The Constitution protects the right to earn an honest living free from unreasonable government interference. And it is unreasonable for Kentucky to pick winners and losers in the marketplace.

Beyond Kentucky, 18 other states require CONs for home health agencies. But with health care costs rising, the last thing the government should be doing is imposing fewer choices and higher prices. Patients and providers—not the government—are in the best position to decide what medical services are needed.

https://ij.org/case/kentucky-con/
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