The CON Process is Good for Alabama

A hospital is a unique kind of business. It’s the only business where the final product is a life-changing experience, a place where every effort is made to meet the physical and emotional needs of patients. It’s an organization that often gives its product away to people who cannot afford to pay for it, is dependent on ever-changing government payments for more than half of its business, and basically accepts what large groups of customers are willing to pay for care, regardless of the price. In fact, health care doesn’t operate at all like a regular business, which is why a careful system of health planning is so important. Alabama currently has a State Health Plan that describes the types of services needed and the number of providers necessary to provide the services. This plan is reviewed annually by a voluntary board of business leaders, consumers and health care providers and revised, if needed, based on information collected throughout the year. When providers or other organizations want to start a new service or expand an existing one, they file an application with another voluntary board, the Certificate of Need Board, which then uses the State Health Plan, along with other information, including public testimony, to determine if there is a need for the service. This is called the Certificate of Need (CON) process, and it’s designed to control health spending and ensure quality. Recently, there has been some discussion about possibly eliminating the CON program. While most hospital leaders would agree that it’s not a perfect system, the vast majority also believe that some type of planning process is necessary to avoid duplication, ensure quality, and preserve access to needed health care services. First, the CON process does control health costs, contrary to what some have stated. In fact, there are three separate studies done by major automakers in Michigan that found average health care costs were lower in states that had a CON process. The argument that competition would drive down costs only works when the consumer has control over purchasing decisions. It does not work in a system where most of the care is paid for by a third-party, an insurance company or the government. Second, having a planning process ensures that providers wanting to offer new services will have the volume of patients needed to support a safe program. For example, if there was no CON process, any individual or organization that had the money and wanted to open a heart catheterization lab could do so, whether the volume of patients was one patient per week or 50. It stands to reason that the more services performed by a physician or a hospital, the higher the reliability and quality of services. Third, in states where CON laws have been repealed, there has been a large increase in the number of new health care providers, primarily those offering lucrative services in high-income communities. In 2005, the Medicare Payment Advisory Commission, the group that advises Congress, reported that where specialty hospitals were allowed to grow unchecked in states without a CON process, these hospitals treated fewer seriously ill patients, were less likely to have an emergency room, and treated a lower percentage of Medicaid patients, thus leaving the traditional providers as the sole safety net in many communities. In fact, in just a few years following the elimination of CON in Ohio, the state had a significant increase in new health services, including a 448 percent increase in imaging centers. It also saw the closure of 21 hospitals, many that had served low-income communities. There are similar stories in other states, which is why 36 states have maintained their CON program. So to the few who would call for an end to the state’s planning process and allow any organization with enough capital to start a health care program, we suggest they think again. Hospitals are not like other businesses, and while there are always ways to improve a program, Alabama’s CON process is the best option available to ensure access to quality health care services for all Alabamians. March 2008