States rethinking need for certificate-of-need laws as fiscal health of hospitals wanes

A boom in construction of new health care facilities has a few states fearing oversaturation, leading them to reconsider tightening certificate-of-need rules.

By Cheryl Jackson, AMNews staff. July 29, 2002.

States that made it easier for new hospitals to be built might be reconsidering those moves, experts say.

With more lenient certificate-of-need laws, more hospitals and surgery centers have been built, leading to more opportunities for physician involvement in such ventures.

In Missouri, after oversight of hospitals ended last year, so many facilities have been proposed that there's a backlog. Efforts to reverse the sunset of hospital review failed, but some success toward a more restrictive certificate-of-need process is expected next session.

Other states are reviewing their own laws in this area, many in part because they are looking at budget deficits and want to lessen their health care costs. Virginia was scheduled to sunset its program this year but decided to keep it. In Tennessee, a new, stricter certificate-of-need law took effect July 1.

Ohio had proposed bringing back their CON law for hospitals after outpatient competition from ambulatory surgery centers, freestanding dialysis centers and radiation therapy centers exploded in the wake of the state getting rid of many requirements.

Those services tend to be high-profit ones for hospitals, which badly need the money to offset money-draining operations. "They probably are the poster children for post-CON expansion," said Thomas R. Piper, director of the Missouri Certificate-of-Need Program. [...]