Certificate of Need and Health Systems

Short Term Protection, Long Term Risk

For many states with certificate of need (CON) statutes, pressure for reform continues to mount. In some states, such as North Carolina and Virginia, CON reform advocates have become more organized in recent years and a flood of CON reform legislation has made its way to the statehouses. Despite this activity, CON laws in many states continue to endure, backed by strong support from state hospital associations. Even without substantial legislative changes, ASC supply continues to grow in CON states. The increasing pressure on CON regulation may help accelerate the growth. In some states, novel approaches are taking hold, such as legislative carve outs and unlicensed surgery centers.

For health systems in CON states facing potential repeal or reform of CON, the uncertainty can cause stagnation. Health system leaders often take a “wait and see” approach to CON. While its natural for health system leaders to protect their organization’s ability to fulfill its mission, the protection CON provides them will erode over time. The good news: health systems have control over their own destiny today. Rather than sit and wait, health systems in CON states should be planning for CON reform today. At the top of planning “to-do” list is often ambulatory surgery centers (ASCs). For many patients, freestanding ASCs are high quality options that are more convenient and much less costly.

Certificate of need can provide vital benefits to health systems, especially those operating in rural areas. However, certificate of need sometimes creates an environment that limits hospitals’ ability to innovate, get ahead of emerging trends, and ultimately, compete with other health systems or non-hospital owned facilities.

According to DJ Hill, Compass Surgical Partners’ CEO, “Successful organizations will be highly competent in creating and managing physician partnerships, use CON to their advantage rather than let it stifle their ability to innovate, and will implement a coherent strategy for rolling out ASCs as the market continues to shift toward lower cost venues.”

To discuss Certificate of Need (CON) regulations with respect to ASCs, call us:

Will Holding, Director
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202-378-0139

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