The certificate-of-need process has been twisted from its intended function into an arena where providers often “battle for service-line dominance and market share,” according to a new study by the Center for Studying Health System Change for the not-for-profit National Institute for Health Care Reform.
In a study of six states with CON regulations, five of them had CON processes that were “highly subjective” and tended to be “influenced heavily by political relationships, such as a provider's clout, organizational size, or overall wealth and resources, rather than policy objectives,” according respondents in the study, who came from Connecticut, Georgia, Illinois, Michigan, South Carolina and Washington state.
Michigan's CON process stood out as being more objective and transparent. CON responsibilities in the state are divided, with an appointed commission setting CON review standards and the state Community Health Department actually reviewing the applications, according to the study. Michigan also is the only state studied with a formal advisory role for industry stakeholders, employers, consumers and other interested parties through a CON standards advisory committee and a medical technology advisory committee.
Other findings of the report: Hospitals use the process to protect existing market share—either geographic or by service line—and block competitors, but they find the CON process onerous if attempting to enter a market; the basic function of CON boards is to process and review applications, but many reported being caught in the competitive crossfire between providers during appeals, public hearings and legislative battles; and most physicians interested in establishing for-profit facilities viewed CON programs as overly restrictive and supported repeal of the regulations entirely.
Researchers from the Center for Studying Health System Change conducted 42 telephone interviews with representatives of state agencies, hospitals, physician groups, medical societies, hospital associations, payers, consultants, attorneys and policy groups that work directly with the CON process in their respective state.