Pros and CON: The ins and outs of the Certificate of Need program.

• Author: Simonelli, Isaac Stone
• Position: HEALTHCARE

Certain essential services arguably exist outside of the sphere of free market forces. One such set of services is provided by hospitals, which are required to provide care, often at a loss, in some cases under the Emergency Medical Treatment and Labor Act (EMTALA), for example, a federal taw that requires anyone who seeks help at an emergency department be stabilized and treated, regardless of insurance status or ability to pay. It is the (often necessary for underserved patients) overuse of expensive emergency room services combined with defunding of certain programs that have contributed to the adoption of the Certificate of Need (CON) Program in Alaska.

The CON Program is a review process designed to promote responsive healthcare facility and service development, rational health planning, healthcare quality, access to healthcare, and healthcare cost containment.

With the Last Frontier's coffers tapped for Medicaid, Alaska is incentivized to find ways to meet the need for public services; promote transparency; and avoid excessive, unnecessary, or duplicative development of facilities or services, explains Becky Hultberg of the Alaska State Hospital and Nursing Home Association (ASHNHA).

Nonetheless, even advocates for the program believe the CON program--in its current state--has some shortcomings.

"Nearly two years ago, Alaska Regional went through the Certificate of Need application process. The program definitely has some issues that should be addressed," Alaska Regional Hospital CEO Julie Taylor says. "ASHNHA provided feedback to DHSS regarding opportunities to improve the program. The CON Program plays a key role in containing costs, especially for the Medicaid program."

The CON program requires hospitals, nursing homes, and other facilities to prove the need for an expansion of services and infrastructure costing above $1.5 million.

"The expenditure threshold for CON was $1 million for many years; however, beginning on July 1, 2005, the expenditure threshold increased to $1,050,000 and increased by $50,000 annually on July 1 through 2013. It is now capped at $1.5 million," explains CON Program Coordinator Alexandria Hicks.

Healthcare facilities subject to the CON process include "a private, municipal, state, or federal hospital, psychiatric hospital, independent diagnostic testing facility, residential treatment center, tuberculosis hospital, skilled nursing facility, kidney disease treatment center (including freestanding hemodialysis units), intermediate care facility, and ambulatory surgical facility."

Unprofitable (but Vital) Services

ASHNHA Senior VP Jeannie Monk argued in her April testimony against a senate bill to repeal the program that such a move would threaten the sustainability of community hospitals, which must continue to provide 24-hour emergency services to all in the community regardless of a person's...