SB108: Protecting Birthing Centers from Protectionist Prohibitions

This bill passed the Senate 24-2 and passed the House 62-4.

Libertas Institute supports this bill.

At present hospitals are able to shield themselves from competition by birthing centers, operated by midwives, by denying them the ability to expand their business and provide more rules. This administrative barrier requires midwives to have a transfer agreement with a hospital as a condition of expansion. No hospitals in Utah will enter into an agreement with midwives.

This is an issue nationwide, with birthing centers in many states being limited in their expansion opportunities due to protectionist policies such as this. The American Association of Birth Centers, in a letter to the Federal Trade Commission, recently highlighted the core problem:

Depending upon state laws and rules, birth centers frequently operate in a needlessly restrictive regulatory environment which is often exacerbated by hostile or exclusionary practices on the part of dominant provider groups, health plans and other payers and professional liability insurers.

Senate Bill 108, sponsored by Senator Deidre Henderson, resolves this issue in Utah by statutorily prohibiting the Health Facility Committee from requiring “a birthing center or a licensed maternity care practitioner who practices at a birthing center” to require specific things, including a transfer agreement, as a condition of allowing free-standing birthing centers from establishing and expanding.

While large players in regulated markets have the tendency to use government power to shield themselves from competition, this is not the proper role of government. Free-standing birthing centers, which compete with hospitals, should not be denied the opportunity to expand by requiring them to first obtain permission from their primary competitors. Further, because hospitals will admit anybody who walks into their doors, a transfer agreement—while helpful—should not be required.