Certificate of Need: How State CON Laws Influence Hospice Growth

Growth is essential for hospices, but the complex regulatory landscape can be overwhelming. Understanding Certificate of Need (CON) laws is crucial to ensuring expansion aligns with state requirements. Let's explore what CON means for hospices and how it impacts hospice's multi-state growth plans.

What is a Certificate of Need?

The Certificate of Need (CON) is a government-mandated approval required before establishing new healthcare facilities or expanding existing services.

It is a regulatory tool used by several U.S. states to manage the expansion of healthcare facilities and services. Some states have no CON laws or requirements at all.

What is the origin of the CON?

The CON was born out of the National Health Planning and Resources Development Act (NHPRDA) of 1974. This federal mandate required states to establish their own CON programs to manage healthcare spending and resource allocation more effectively. Although Congress repealed the NHPRDA in 1987 amid debates about its efficacy, some states chose to maintain or adapt their CON regulations, leading to the varied CON laws we have today.

What is the purpose of the CON?

The initial goal of CON laws was to control health care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.

CON laws were created to ensure:

• Optimal balance of healthcare services: Preventing over-capacity and improving healthcare access in underserved communities
• Cost control: Averting unnecessary capital expenditures that could potentially increase healthcare expenditure
• Quality Care: Regulating the expansion process so facilities can focus on quality improvements based on patient care standards
• Equitable Care: Managing Medicaid spending so facilities can provide accessible services to indigent populations.

How does the CON Program work?

In a state with a CON program, a health planning agency or other entity must approve the creation of new health care facilities or the expansion of existing services in a specified area.

CON applications are typically compared against the states plan and CON review criteria. The provider MUST demonstrate that the proposed expansion answers an unmet need in the community AND will not adversely impact the services of existing providers in the area. A comprehensive market assessment is hence crucial in this stage. Other important review criteria include:

• Accessibility
• Quality of care
• Continuity of care
• Acceptability
• Financial feasibility

CON laws vary by state

The application and enforcement of CON laws vary significantly across states, with some having dismantled or scaled back their CON programs.

Source: National Conference of State Legislatures

Critics argue CON laws stifle competition, hinder innovation, and do not effectively control healthcare costs, especially for hospice. Some states without CON regulations, like Texas, are often cited as examples that challenge the effectiveness of these laws.

For hospices looking to expand or start new services, work with an expert who can guide you through the entire CON process including data and market research, contact Hart Healthcare Solutions. We can support your hospice with CON application & rebuttal, due diligence, market research, data compilation, and more.

Join the Discussion! What has been your experience with the CON process? Do you find it necessary for maintaining balance, or a barrier to access? Share your thoughts and experiences as we explore ways to enhance responsiveness and quality of care.

Check Out This Infographic:

Sources:

National Conference of State Legislatures. Certificate of Need State Laws.

Definitive Care. Certificate of Need.

Maureen K Olhausen. Certificate of Need Laws: A Prescription for Higher Costs. p.1

CHAP Inc. Understanding CON in Healthcare. Special thanks to Michael Rovinsky for this extremely helpful resource on Understanding CON!