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, amednews 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.

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Region: States

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.

Easing Ohio certificate-of-need rules led to 300 new diagnostic imaging centers and 150 surgicenters.

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.

Since certificate of need went away for hospitals in Ohio, that state has seen the construction of 150 additional surgery centers and 300 additional diagnostic imaging centers. Often the new facilities are physician-owned.

"Those are the services that have the ability to serve those who have the ability to pay," Piper said.

In the Columbus area, hospitals are combating plans of 28 doctors to open the $38 million New Albany Surgical Hospital, specializing in orthopedics, saying the facility threatens the fiscal health of existing hospitals. But the New Albany group says it can provide better, more cost-efficient care at a specialty facility.

"We were frustrated working within certain hospital systems that don't appear to want to move forward," said New Albany orthopedic surgeon Carl Berasi, DO. He said the facility will "accept every patient that we are medically qualified to treat."