States scrutinize big-ticket purchases by group practices

States are using certificate-of-need laws and other methods to keep a closer watch on health care spending, saying it's for quality and cost control.

By Mike Norbut, AMNews staff. Dec. 23/30, 2002.

When the physicians at Minnesota Oncology Hematology Professional Assn., a group based in the Twin Cities area, decided they wanted to purchase a PET scanner nearly a year ago, they didn't expect to be embroiled in a controversy over need and rising health care costs.

Instead, they faced scrutiny at a public meeting hosted by the Minnesota Dept. of Health -- the first of its kind under an untested state process approved 11 years ago-- giving a rival oncology group and a local hospital, which has a mobile positron emission tomography scanner a few days a week, the chance to question the $1.5 million proposal.

"It's been a cumbersome process," said Thomas Flynn, MD, a medical oncologist and president of MOHPA, which saw a decision on its proposal delayed so it can be reviewed under federal anti-kickback laws. "It's delayed our plans considerably. If the Dept. of Health turns down the proposal, we'd have to look at if this is a fair result."

Ironically, Minnesota doesn't have a certificate-of-need law, but it is the latest in a string of examples of states paying closer attention to the spending habits of physicians and hospitals. As health professionals look for ways to provide more services and increase profitability, regulators are taking a tighter hold on the reins, claiming it's for quality and cost control.

"Because of budget crises in state government and dramatic spending increases in health care programs, there's been a real resurgence in regulation," said Thomas R. Piper, director of the Missouri Certificate-of-Need program and past president of the American Health Planning Assn. "They're looking at how to bring health care costs back into line." [...]