Is Applying for a Certificate of Need (CON) for a New ASC ‘worth it?’
Insights from an ASC Expert
July 28, 2021 - Is Applying for a Certificate of Need (CON) for a New ASC ‘worth it?’
In about half the states in the U.S., a Certificate of Need (CON) is required to develop a new ASC. The efficacy of CON can be a controversial issue, but this article will not discuss the value of the legislation. Instead, I’ll provide a brief overview of the process and key items to consider before filing an application. We’ll discover whether applying for a CON is really worth it.
Certificate of Need Approval Process Overview
The stated purpose of the CON is to ensure a documented ‘need’ for a new operating room in a defined geography (typically a county). The CON approval process varies by state, but the general steps to file an application for a new CON are as follows:
- Understand the state’s legal criteria for approval of new CON applications.
- Gather appropriate data and determine if the proposed project meets the statutory requirements.
- Draft a comprehensive application documenting all required data and calculations. Letters of support from surgeons and community leaders are also beneficial, demonstrating public support of the proposed project.
- File to meet state-based application deadlines (if applicable). Some states have certain time periods in which a new application can be submitted.
- Await the state’s approval.
- Manage any appeals from competitive threats.
Cost of CON Filing and Probability of Success
Those interested in pursuing a new ASC project in a CON state often ask me,
1. What's the likelihood of success?
2. How much will it cost?
- Success is contingent upon the strength of the application (supporting data, projected case volumes, demand, public need, etc.), competitive market dynamics, and political landscape. If competitive interests appeal or try to block approval, the process can be slowed. A strong application is as much technical as it is strategic, pulling the right levers to get a project through without too much expense or time lapse. Ultimately the probability of success is market and project specific.
- The average cost to file the application is typically $50,000 - $100,000, including the state’s filing fee, consultant fee to draft the application, and potentially site due diligence. Each state differs in its approach to filing fees.
So, is Filing a CON Application for a New ASC Worth It?
In the long run, it’s worth the fight. Facilities in CON states hold substantially more value than facilities in non-CON states, principally because supply of ASCs has been suppressed in CON states. We believe tailwinds are behind ASC applications right now also.
It is a time consuming and often overwhelming process, but the ability to have a physician-led ASC and the financial upside that comes with investing in an ASC is usually well worth navigating the CON process.
Our team at Compass can help simplify the complex process and give you a professional opinion on your probability of success with a new CON filing. For context, our team has won every CON we’ve filed.