Whatever the outcome of the Tony Rezko trial, it has had one salutary effect: The uselessness of another government bureaucracy is on full display

I’m referring to the Illinois Health Facilities Planning Board, which was created in 1974 with the misguided notion that health care costs could be controlled by government clamping down on hospital construction.

Rezko is charged with stocking the board with an acquiescent majority, which he used to try to engineer board decisions for kickbacks. At Rezko’s instructions, according to testimony in the trial, that board approved a new hospital in Crystal Lake, even though state health experts said the Crystal Lake hospital wasn’t needed. Expertise has a way in Chicago and Illinois of collapsing in the face of hurricanes fueled by greed and corruption.

As interesting as the testimony in the lengthy trail has been, detailing the ins and outs of the arcane form of government here, the board’s vote demonstrates the vulnerability of companies and institutions that need government approval to operate. The board has life or death decision-making powers over proposals—worth more than hundreds of millions of dollars—to build new or expand existing hospitals, nursing homes and other Illinois health care facilities.

Which raises the question of whether agencies such as the Illinois Health Facilities Planning Board (IHFPB) are needed at all.

In the case of the IHFPB, the answer is a resounding no. It’s not just because its very existence invites corruption. It’s also because it doesn’t effectively do its job of controlling health care costs, ensuring access to health care, elevating the quality of care and confirming the financial viability of the health care providers.

Problems with Illinois CON program were noted in a 2001 Legislative Audit Commission report. “The only tangible cost savings the Board has identified in its annual reports,” the commission said, “is the difference between dollars proposed and dollars approved.” That’s hardly a measure of the quality of its work.

Furthermore, the commission said, “By law, a person establishing, constructing or modifying a health care facility must have the financial resources to adequately provide a proper service for the community. However, in board-approved projects the auditors analyzed, fewer than a third, “where the financial viability criteria applied, received a positive rating. In other words, financial viability criteria did not appear to affect the Board’s decision when awarding a CON.”

More recently, a 2007 study for the state Commission on Government Forecasting and Accountability, mandated by the Illinois Legislature, questioned the entire concept of the regulatory scheme. Such regulatory set-ups—called Certificate of Need (CON) programs—in other states have generally failed their purposes. As a result, nearly a third of the states have terminated their CON programs.

The commission’s report, prepared by the Lewin Group, stated that the CON program rarely reduces health care costs, and has the potential, in some cases of increasing costs. Maintaining health care access for everyone has been only marginally beneficial. And the program resulted in fewer specialty providers and ambulatory surgery centers. Further, states that ended their CON programs “did not experience a rise in spending costs relative to other states.”

One of the touted benefits of CON programs is the protection they provide for “safety-net” hospitals, mainly struggling inner-city hospitals that are less able to compete for well-insured or suburban patients. The Lewin Group analyzed Medicare data to see how CON programs affected hospital “margins” and found that “safety-net hospitals have somewhat lower margins in CON states, contrary to the argument that CON protects those hospitals. Replication of these results would further weaken the arguments supporting CON.”

It’s my belief that CON programs from the start were doomed to failure, because they were conceived in the notion (hope, actually) that government “planning” could more effectively allocate resources than the market. Only planning, the mindset 30 years ago argued, could eliminate the “duplication” of health care services and the “proliferation” of excess, empty beds. There was some validity to the argument that the market had generated excess supply (e.g. empty beds), but sometimes the arguments were ridiculous. Why, asked CON proponents, should every hospital have a CT scan, when they could be shared by several hospitals? Of course, CT scans have since become a routine, valuable and necessary diagnostic tool for every hospital. One cannot imagine how, in the real world, any money could have been saved by transporting the many patients who needed scans back and forth between hospitals. Or that their health would have been better served.

The Lewin report recommended that the IHFPB’s life be extended to 2010 while fundamental questions about the board’s value are deliberated. I think we’ve already got the answers.