February 8, 2017; Naples Daily News

Most states place limitations on the number of hospitals and hospital beds that may be maintained within a community or service area using a certificate of need (CON) process. Florida’s governor, Rick Scott, is working to change that for his state, and nonprofit hospitals are nervous.

Opponents of the certificate of need process, especially as it applies to hospitals, claim it is anti-market and has the effect of reducing competition, thereby increasing healthcare costs and promoting facility construction by existing hospitals. Proponents argue that the process assures that a hospital can provide a broad range of services, regardless of a patient’s ability to pay, with a better chance of sustainability. In addition, many patients do not shop for hospital-based services in the same way they do for most other goods and services, reducing the value of choice between competing facilities in a community.

Existing hospitals see the threat of broader competition coming not from other hospitals providing tertiary or quaternary care (full service or full service with rarely found additional services, respectively), but from specialty hospitals. Often physician-owned, specialty hospitals can focus on more lucrative services such as cardiac or orthopedic care without also having to maintain less profitable or unprofitable services such as mental health or services to people with disabilities. In addition, specialty hospitals may attract better-insured patients, leaving community hospitals with a higher percentage of uninsured or underinsured patients.

The Florida Hospital Association has been successful in its longtime opposition to changes in the state’s certificate of need program, but Gov. Scott has identified it as a top legislative priority and both the state’s current and likely next Speaker of the House agree.

Certificates of need also apply to nursing home and hospice construction in Florida, as they do in most states. “There is some valid discussion on [certificate of need] as it applies to hospitals. When it comes to hospices and nursing homes, certificate of need is a little bit different,” said. Sen. Kelli Stargel (R-Lakeland), who is vice chair of health and human services.

The nonpartisan National Conference of State Legislatures (NCSL) says that 34 states maintain some form of certificate of need (CON) process, down from 49 states in the 1980s. The federal mandate for states to have a CON process and the funding to support it was repealed in 1987.

The talk in Florida may be an exercise in early posturing, but nonprofit hospitals and the communities they serve need to be ready to address how competition may affect both their sustainability and their ability to meet their missions.—Michael Wyland