What Is Certificate Of Need? Explaining A Likely Health Care Fight At The Gold Dome

Interests on both sides are gearing up for a fight when it comes to potentially changing Georgia’s Certificate of Need program. It’s the system the state uses to determine the need for new hospitals or clinic.

Matt Rourke / Associated Press file

This year, Georgia lawmakers and health care industry lobbyists will likely have many heated conversations about a complex issue that sounds pretty dull: certificate of need.

The Certificate of Need (CON) program is how the state of Georgia evaluates the need for new hospitals or clinics. Without a CON, hospitals or clinics can’t open their doors or expand.

“It is one of the most complex issues that they deal with down here under the Gold Dome,” said Ethan James, a lobbyist with the Georgia Hospital Association. The industry trade group represents most of the hospitals in the state.

James likes to explain how CON works using the example of a car dealership, with a contract to serve a certain market.

That dealership might have a monopoly in the region, to say, sell Ford cars and trucks, but it also has to provide a lot of services that don’t make any money, such as offering financing or service and repairs, aren’t profitable. The dealership only has one real moneymaker: the F-150 pickup truck.

Hospitals are much the same, James argues. They have to offer a lot of services that lose money: running an emergency room or caring for people who don’t have insurance, for example.

James said hospitals only have a few F-150-like services of their own, such as outpatient surgery.  So, if competition for those money-making services comes in, hospitals might not be able to keep their doors open and serve patients who need them.

“If Ford Motor Company allowed someone to come in and open an F-150 dealership across the street, [the dealership would] be out of business in two months, because that’s where the profit is,” James said.

That’s where certificates of need come in. The Georgia Department of Community Health issues them to guard against duplication of health care services. The agency says that keeps down prices for consumers.

James said, in general, the current system works because it controls costs and ensures that people have access to health care services.

Looking For Changes

But there’s an effort afoot among Georgia lawmakers to overhaul how Georgia handles certificates of need this legislative session.

“What I want to see with CON is deregulation, more competition, driving quality and driving price and more innovation, that’s the bottom line,” said state Sen. Ben Watson.

He chaired a state senate study committee looking to reform how the Georgia handles certificates of need. It’s report recommended broad changes to the current set of rules.

Watson said the CON system is too restrictive. He wants to make it easier for facilities that offer money-making, F-150-like services, such as outpatient surgery, to open their doors.

He argues more competition in the health care market could lead to better care for patients at lower prices.

And Watson said hospitals in Georgia can handle more pressure without being driven out of business. He said most of them have a big advantage: they’re nonprofit and mostly tax exempt.

“The F-150 dealer who has been there all along doesn’t pay property taxes. You’re telling me that’s not a good deal for the hospital?” asked Watson, responding to the Ford dealership thought experiment.

Watson is well-positioned to guide the conversation about possible changes to the CON system. Last month, he was appointed head of the state Senate Health and Human Services Committee, which will likely shape CON legislation.

And he’s not the only Georgia lawmaker looking for major changes to the CON system. State Rep. Terry England thinks hospitals and clinics with certificates of need shouldn’t be able to shut out competitors.

He’s no fan of the current CON system or the car dealership comparison, for that matter. Here’s why: people choose whether to buy a truck; they don’t choose whether they get sick.

“Health care is something that everyone has to have, and we as a state are not in the business of selling franchises to be the exclusive provider of something in a community,” England said.

England co-chaired the Georgia House Rural Development Council, which recently recommended replacing the CON system with a licensing and accreditation process for health care facilities.

Though, he knows those changes won’t be an easy sell to those who like the current rules.

“I think everyone fully understands it’s going to be a heck of a battle on both sides,” England said.

An Interconnected Issue

Those sides? For the most part, providers that have certificates of need and those who don’t.

It’s a fight Laura Colbert will be watching closely. She heads patient-advocacy group Georgians For A Healthy Future and hopes what’s best for health care consumers doesn’t get lost in the shuffle.

“I don’t know that patients are a central part of the decision making right now, and frankly, haven’t been a central part of the debate so far,” Colbert said.

The last major adjustment to Georgia’s CON system came a decade ago when lawmakers opened up the system a bit, but only after a bruising fight.

Colbert’s prediction for how things will shake out this time around?

“CON is interconnected with other debates around health care at the Capitol and that the success of one may improve or tank the chances for another,” she said.

Yes, there might be even bigger fights about health care at the legislature this session. Lawmakers may also take on expanding Medicaid in some form or fashion.

And reaching an agreement there, could be harder than getting a Ford truck die-hard to drive a Chevy.