CERTIFICATE-OF-NEED: States Relax Hospital Restrictions
"New Jersey and a growing number of other states have begun to lift restrictions on the kind of specialized services and new technology that hospitals can provide," the New York Times reports. While the restrictions were imposed about 20 years ago in an attempt to "hold down costs by limiting duplicative services at hospitals in the same area," the Times reports that many hospitals believe the new managed care era renders these restrictions obsolete and burdensome. Hospital officials also contend the regulations limit competition. "It just does not make sense in today's market. Hospitals need more flexibility. They need to be able to respond to market forces. ... To maintain a regulatory process that is that inflexible is not responsible in a competitive market," said Valerie Sellers, vice president of health care planning at the New Jersey Hospital Association.
Haves vs. Have-Nots
Many urban hospitals support the hospital regulations, called certificate-of-need laws, because "[t]hey are concerned that allowing suburban and smaller community hospitals to offer many of the same services will jeopardize their financial standing" by luring insured patients elsewhere. Other critics say relaxing the regulations could compromise the quality of care, as some rural hospitals would not have the expertise in providing specialized services as larger, urban hospitals do. "[Q]uantity drives quality," say these supporters, noting that "patients have better outcomes at hospitals that perform a high volume of" specialized procedures.
The Times reports that New Jersey Gov. Christine Todd Whitman (R) signed into law earlier this month a bill relaxing the certificate-of-need standards in the state. Hospitals no longer need the state's permission to set up pediatric or maternity wards or ambulatory surgery and magnetic resonance imaging services. But the regulations are still in place for "highly specialized services such as cardiac surgery, organ transplants and neonatal intensive care." A state task force is currently studying whether these areas should also be relaxed. "I think that one of the most important issues that the commission will consider is what any further exceptions would have on inner-city hospitals," said Len Fishman, health commissioner for New Jersey. The Times notes that 37 states still have certificate-of-need laws in place; Georgia and Washington rejected moves to eliminate them earlier this year. New York and Connecticut are "streamlining" their laws, and Pennsylvania, North Dakota and Ohio no longer have CONs on their books (Preston, 7/27).