ATLANTA — At the shuttered Atlanta Medical Center, a mural reading “Stronger Together” next to a summer bouquet of hydrangeas sends a hopeful message. The campus was largely quiet on a recent weekend since AMC closed nearly two years ago. A lone security vehicle sat behind a chain-link fence and pedestrians walked by without even glancing at it.

In the town of Cuthbert, about 155 miles away, the Southwest Georgia Regional Medical Center is also closed after closing four years ago, another hospital casualty in the South in a region that has many. Even a smaller facility to replace the former Cuthbert hospital “would be huge for the county,” said Steve Whatley, chairman of the Randolph County Hospital Authority.

The two hospitals – one in the city centre, the other in the countryside – faced the same financial problems, including a lack of privately insured patients.

This year, they also caught the attention of some of Georgia’s most influential politicians. A bill signed by Republican Gov. Brian Kemp in April included a provision pushed by Democratic U.S. Sen. Jon Ossoff.

The law changes the state’s certificate of need system, which allows existing hospitals and other health care facilities to block expansion plans by potential competitors on the grounds that there is insufficient need for their services.

According to the National Conference of State Legislatures, 35 states and Washington DC have certificate of need laws. The hospital industry, particularly nonprofits, generally supports the regulations, arguing they will reduce health care costs and ensure access to quality medical services. CON requirements require health care providers to obtain state approval before offering new services or building or expanding facilities.

Whether the laws improve care or reduce costs is questionable, researchers have found, and critics say more competition would reduce spending by insurers and consumers. In 2018, the Trump administration released a report recommending that states repeal or revise their certificate of need requirements because they increased health care costs.

“The evidence is pretty overwhelming that CON laws are not achieving their original goals of improving access, reducing costs and improving quality,” said Matthew Mitchell, a senior research associate at West Virginia University.

Dan Sullivan, a Georgia-based consultant who frequently assists hospitals and other medical providers in their efforts to comply with the law, said that by limiting the number of providers of highly specialized health services such as organ transplants, states could better maintain high quality care.

Certificate of need laws can reduce fraud, Sullivan said. Florida repealed its certificate of need requirement for hospitals and many other health care providers at the recommendation of the Trump administration. Fraud in the state increased after the regulations were phased out, he said.

“When you file a CON, there is at least a minimum of investigation,” Sullivan said.

Another advantage of the laws is that they often prescribe a minimum level of charitable care, he argued.

Other Southern states have recently rolled back their certificate of need laws. Tennessee lawmakers passed a law this year that exempts more medical providers from the requirement to obtain a certificate. North Carolina rolled back some restrictions as part of a reform that paved the way for Medicaid expansion last year. South Carolina made significant changes to its laws last year.

This year, Republicans in the Georgia legislature attempted to repeal the state’s certificate-of-need rules, but the attempt failed due to fierce opposition from hospitals.

The narrower bill signed by Kemp would instead loosen regulations on building hospitals in rural areas and exempt a potential new hospital that would be in partnership with the Morehouse School of Medicine, one of the few historically black medical schools in the country.

This could potentially fill much of the gap created by the closure of the Atlanta Medical Center.

Hospital industry officials said Morehouse would likely need a deep-pocketed partner, and Atrium Health, part of Charlotte, North Carolina-based Advocate Health, could be a logical partner. The growth-oriented nonprofit health system has partnered with Morehouse Healthcare to operate a clinic in East Point, south of Atlanta, and is growing its presence in the state. Both Morehouse and Atrium declined to speak to KFF Health News about a potential hospital partnership.

Meanwhile, AMC’s closed main campus is affected by a city moratorium on redevelopment of the site – a response to the shocking decision by owner Wellstar Health System to close the hospital.

In 2022, Mayor Andre Dickens issued an executive order temporarily halting any new development on the site, criticizing the “unusually abrupt closure of one of Atlanta’s most important medical centers.”

The Atlanta City Council extended the ban for another 120 days in June.

A new hospital downtown “would be a huge financial burden,” says Josh Berlin, CEO of Rule of Three, an Atlanta-based health care consulting firm, because it would primarily attract the region’s high number of uninsured and Medicaid patients. Georgia is one of 10 states that has not fully expanded Medicaid and therefore has a high number of uninsured patients.

“With the closure of Atlanta Medical Center, a community is struggling to find medical care,” he said.

Grady Memorial Hospital and other Atlanta facilities have seen an increase in patient volumes since AMC closed, and Grady is regularly rated as “dangerously overcrowded” on a state dashboard.

The need to treat additional patients has accelerated Grady’s expansion plans, including adding more than 150 beds, said Shannon Sale, the hospital’s chief strategy officer. “We knew that would be necessary over time. The closure of Atlanta Medical Center accelerated that process,” she said.

In southwest Georgia, the plans are more modest.

Community leaders, including Whatley, are awaiting the results of a feasibility study that is expected to propose a scaled-down “rural emergency hospital,” a new federal designation that allocates additional funding to eligible facilities.

The program guarantees hospitals in rural communities additional Medicare payments and an additional payment of about $3.2 million per year if they close costly inpatient services and offer only emergency and outpatient care.

Ossoff secured nearly $12 million in three separate appropriations bills to support a rural emergency hospital in Cuthbert. He said he met with state leaders to push through the provision in the Georgia Certificate of Need bill that would allow it to reopen. Southwest Georgia Regional Medical Center would also need to get a waiver from federal regulators to qualify as a rural emergency hospital because of its closing date.

“This is a big challenge and we still have a lot of hurdles to overcome,” Ossoff told KFF Health News.

Even if the Cuthbert facility reopens, it will face the same pressures that led to its closure in the first place — what Ossoff called a “failure of state policy,” referring at the time to Georgia’s decision not to fully expand Medicaid after the closure.

Brenda Clark, who works at a wellness center across from the closed Cuthbert Hospital, said some locals are skeptical about the facility reopening.

“It’s desperately needed. People are hoping and praying that we’ll get it back,” she said. But “there are people who say, ‘We won’t believe it until we see it.'”