PROPOSED POLICY CHANGE

The certificate of need (CON) program regulates the growth of new health care services in Florida.  In place of the current CON process, parties are considering changes to the licensure requirements for hospitals.

Proponents of de-regulation point to the need to enhance competition in the health care market.  This is an overly simplistic goal.  A great deal is at stake for Floridians in the delivery of hospital-based health care if such an approach were embraced without deeper consideration.  It would almost certainly further de-stabilize an already tenuous health care safety net.  Below are more specific concerns about the impact of unregulated hospital growth. 

With Ownership, Physicians to Steer “Most Desirable” Patients to Owned Entities

Physicians greatly influence where their patients receive services.  Despite Stark laws, it is likely that patients with fewer resources (no insurance, too little insurance) or more significant health problems (reliance on more resources) will be shifted to existing hospitals, while patients  with better insurance, less severe problems and requiring fewer resources will be seen in owned facilities.  These results will further harm the ability of existing providers to adequately cover costs.  It is also shown that where physicians have ownership, there is an overall increase in utilization to the system, which drives overall health system costs higher as well. 

Physician-owned Hospitals Ill Prepared for Emergencies

A recent report by the Office of Inspector General of the Department of Health and Human Services highlighted significant problems with emergency care in physician-owned hospitals which would likely flourish without the CON process.  These include that only half have emergency departments; the majority have one emergency bed; not all these hospitals have nurses on duty or physicians on call.  Furthermore, two-thirds of these hospitals use 9-1-1 in their emergency procedures; and 34% use the service to stabilize patients, which may violate Medicare rules. 

 Straining Healthcare Workforce, Driving up Cost of Care

Currently, hospitals experience staffing challenges with a shortage of specialty physicians and other licensed personnel.  If new hospitals are established without regulation, one result will be an increase in staffing costs, as increased demand on a limited pool of workers.  Another result will be the stretching of clinical staff beyond their spheres of competence.  The end result will be increased costs to the system overall and strain on staff.

Harming Ability of Existing Providers to Care for Uninsured and Underinsured

Currently, hospitals provide significant amounts of care to the uninsured and underinsured.  By caring for those with adequate insurance, hospitals are able to offset losses for those patients. 

Proposed Regulatory Payments to Charity Care Unlikely to Benefit Enough

Some proponents of deregulation envision requirements for new hospitals to either provide some level of charity care or to pay into a fund to be distributed among those who provide care to the uninsured and underinsured.  However, we note that the funding will almost certainly not make up for lost total revenue to existing providers.  Existing providers do not only lose any margin from patients with better insurance, but also the revenue that allows providers to cover the costs expenses for the care.

Healthcare is a Social “Good” Not Well Distributed in “Marketplace”

Ultimately, health care is an essential good that is not well distributed in what is commonly considered “the marketplace.”  Markets are good at distributing goods that are easily compared by consumers, for which entry to the market is easy and not costly.  Neither of these principles is met in the delivery of health care services at this time.

RECOMMENDED POLICY – MAINTAIN CURRENT CON STRUCTURE

Maintain the current certificate of need policy.

Contact: Michael Sheedy, Associate Director for Health, msheedy@flacathconf.org, 850-205-6824.

 Last updated: January 22, 2008