As part of the 2010 legislative session, Connecticut is reforming the “certificate of need” process under which the state approves or denies capital projects and purchases for hospitals and clinics.
The new law requires the Connecticut Office of Health Care Access (OHCA) to conduct an inventory of medical facilities and services throughout the state, the first step in creating a statewide facilities and services plan according to Cristine Vogel, a deputy commissioner with the Connecticut Department of Public Health (DPH) who oversees OHCA.
“My staff is starting to work with the DPH licensing unit to find out what data they can get, but the agency has never embarked on inventorying all the different facilities,” Vogel said, in testimony on the bill this spring. “We have it in pieces, but there”™s no one place in the state that anybody can use to find out where are all the, (for instance), outpatient mental facilities.”
As the bill proceeded through the legislative process, it was met with a broad array of dissent ”“ from the New England Health Care Employees, with the union protesting the elimination of public hearings for health center closures; to the Connecticut Hospital Association concerned over vague passages in the bill CHA deemed could lead to confusion.
Connecticut”™s certificate-of-need (CON) process is based on estimations of supply and demand for medical services in towns, with the state projecting volumes of patients for those services. It is intended in part to ensure that hospitals and clinics do not unnecessarily duplicate existing services in a region.
According to the National Conference of State Legislators, in 1964 New York became the first state to enact a statute granting the state government the power to determine whether there was a need for any new hospital or nursing home before it was approved for construction. Certificate-of-need laws were put into effect nationally as part of the federal Health Planning Resources Development Act of 1974. In 1987, the federal government repealed that mandate, but 36 states today still have CON laws on the books, and the rest still retain some mechanisms to limit the duplication of health services.
The basic assumption underlying CON regulation is that excess capacity in the form of facility overbuilding directly results in health care price inflation. When a hospital cannot fill its beds, fixed costs must be met through higher charges for the beds that are used, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual needs.
Opponents argue CON laws keep prices high by reducing competition for health services within a geographic area that could otherwise flourish in the absence of market oversight.
Under the new Connecticut law, the state will still require a certificate of need for many scenarios, including new health care facilities; sales; increased beds; acquisitions of imaging scanners; and acquisition of any equipment that uses technology new to the state.
Under the new law, the state is eliminating all thresholds on capital expenditures; an “additional function or service” requirement; and CON requirement for hospitals and clinics that are terminating services. All told, the changes should reduce the amount of CON applications by half.
The state is expediting the process for remaining CON applications by eliminating a requirement that hospitals and clinics submit a letter declaring the intent to file an application at least two months in advance of the application itself.
