Capitalism abhors monopolies and prizes competition. During the late 19th and early 20th centuries, our federal government established the Sherman and Clayton antitrust acts to limit the creation of industrial monopolies and stimulate competition in the marketplace.

Antitrust legislation is predicated on the concept of unfettered competition. It is commonly believed that unfettered competition will lead to lower prices of goods or services, a better allocation of resources and an increase in quality. Many also believe it more effectively fosters industrial creativity and innovation.

Our country's unparalleled economic success over the past two centuries underscores the wisdom of promoting competition in the marketplace.

Our health-care system has regretfully evolved into a hybrid industry. As are many industries, it is subject to some of the rules and regulations of a free market system. Unlike other industries health care has been uniquely burdened by specific state and federal regulatory acts that are excessive and at times oppressive.

One of the most ineffective acts of state health-care regulation involves the certificate of need (CON) process. A CON law was first created by the state of New York in 1964. The law was developed in response to rising health-care costs, driven by a common health insurance reimbursement system known as retrospective reimbursement. The U.S. Congress passed a law in 1972 requiring states to review and approve all capital expenditures exceeding $100,000 or more by health-care providers. The legislation also applied to changes in bed capacity and "substantial changes" in health-care services. By 1980 all states enacted CON laws because they would be subject to stiff federal financial penalties if they declined.

South Carolina's CON program was specifically designed "to promote cost containment, prevent unnecessary duplication of health-care facilities and services, guide the establishment of health facilities and services, which best serve public needs and ensure quality health services are provided."

While created with altruistic intent South Carolina's CON program fails to accomplish its primary objectives. CON programs do not contain costs. Congress first repealed the federal CON requirement in 1986 after it became apparent that it was not succeeding in keeping health-care costs down and may actually have contributed to increasing costs. Contemporary research published by Drs. Christopher Conover and Frank Sloan at the Duke University Center for Health Policy, Law and Management in 1998 and 2003 concluded CON laws had no effect on overall health-care spending.

The 1998 article noted that CON laws resulted in " ... higher costs per day and per admission, along with higher hospital profits." Several other studies have reached comparable conclusions regarding cost containment. In a July 2004 report, the Federal Trade Commission and the U.S. Department of Justice stated that there is "considerable evidence that CON laws can actually drive up prices by fostering anti-competitive barriers to entry."

CON laws do not always prevent the unnecessary duplication of health-care facilities and services. An inquiry conducted by the state of Mississippi found the state needed only 6,682 hospital beds but had 11,457 in existence despite a CON process. This led Mississippi State Senate Public Health Chairman Alan Nunnelee to conclude that "the CON process really has no effect, and we've overbuilt in terms of hospital beds".

One can also debate the CON's impact on the quality of health care delivered in this state. Our state's historically poor performance in leading disease indicators suggests it has had little or no meaningful impact.

Despite the fact that it has been shown to be ineffective, South Carolina continues to support CON laws for unclear reasons. Most other states have abandoned them. It is obvious that several entities within our state have a strong interest in keeping the CON process intact despite its lack of impact on our health-care system. Hospitals generally support them to limit competition. Bureaucrats do so in order to maintain "control" of the health-care system. Attorneys also stand to lose much as many CON applications are fiercely contested and result in a major source of legal revenue.

A local example exemplifies the shortcomings of our existing CON process. Roper Hospital submitted a CON earlier this year to build a new 85 bed hospital facility in Mount Pleasant. Roper administrators have argued that the demographics would support a second hospital in Mount Pleasant. They also have argued that a new hospital in Mount Pleasant might lower health-care prices for residents through competition. The Department of Health and Environmental Control (DHEC) faces a difficult decision. If the application is denied, then East Cooper Medical Center maintains a monopoly status in the Mount Pleasant market and prices are unlikely to change for consumers.

Traditionally DHEC sides with the existing institution and allows them to add hospital beds if the demographics support the expansion. If the application is approved then Mount Pleasant residents will have a choice of health-care providers and competition will likely cause a decline in prices.

This creates a tenuous situation for DHEC, however, as this precedent may entice health-care providers to enter other growing markets like West Ashley, Summerville or Berkeley County. Neither is likely to happen soon because of the delays that occur with any CON application and the likelihood the ruling will be challenged.

Time, money and resources are wasted while our state bureaucracy attempts to predict the future and decide what is best for the local health-care market.

Can you imagine McDonald's being reviewed and legally challenged by Wendy's, Burger King, etc., every time it wished to construct a new franchise?

Gov. Mark Sanford recently stated in a recent commentary on school choice: "From day one, our administration has been focused on advancing ideas that are all about making South Carolina more competitive ... becoming more competitive means pushing for reforms that are consistent with market principles. ... "

Gov. Sanford should remain true to his economic philosophical stance and work to abolish our state's CON laws and promote free-market principles in health care. Market dynamics are far more reliable than the whim and fancy of a few Columbia bureaucrats.

It makes no sense to support an agency that does not meet its objectives. The state of our health-care system speaks for itself. It is time to rid ourselves of this biased, inefficient and "unAmerican" practice and allow free market principles to dictate behavior in the health-care industry.

Dr. Kent J. Stock is an infectious disease physician in Charleston who also holds a MBA from the physician executive program at the University of Tennessee.