Certificate of Need

Certificate of Need

South Carolina is among 35 states that maintain some type of Certificate of Need (CON) program to ensure access and quality of care for the citizens we serve. And while we recognize that the way healthcare is being delivered is changing around the country, we also understand that abrupt change leads to uncertainty, and uncertainty is not a favorable environment for business to thrive.

After all, for many South Carolina communities, hospitals are not only their largest employers, but also the chief economic driver and a critical piece of economic development that potential employers consider when deciding where to locate their next manufacturing facility or distribution center. That’s why South Carolina’s hospitals support CON reform that would maintain the program and provide certainty for an industry that continues to adjust to federal health care reform and other measures that drastically change the way we do business.

For its opponents, Certificate of Need is an issue that stifles competition and creates barriers to the “free market.” But what many do not understand is that for hospitals, health care is not a free market. Unlike other medical facilities, hospitals are required to provide emergency treatment to everyone who walks through our doors, regardless of ability to pay. Meanwhile, other facilities like physician practices and outpatient surgical centers have the authority to avert patients that are uninsured or underinsured that often end up in our emergency rooms. When you couple that with the fact that the U.S. government remains the largest purchaser of health care services through Medicaid and Medicare — providers with whom we cannot negotiate and reimburse hospitals less than cost — you begin to understand the need to properly plan for the health care needs of citizens so that everyone has access to treatment. That’s the importance of CON.

Without a health-planning process, specialty healthcare facilities could simply set up shop next to a hospital and siphon away the more lucrative services and commercially-insured patients, leaving hospitals only to manage the sickest and most indigent members of the community. This would lead to more community hospitals closing their doors as they lose the profitable service lines and commercially insured patients that we rely on to subsidize the services we offer to the uninsured and underinsured. Ask any hospital, and they’ll tell you, this is the business model we depend on to meet our mission to serve everyone in our communities.

The state’s rejection of Medicaid expansion has only intensified that issue, as hospitals continue to have a high number of uninsured patients that we must care for. One could determine that if the state were to take advantage of South Carolina’s federal tax dollars to provide health coverage to more South Carolinians, there would be less of a need for CON to protect access to our hospitals. Simply put, if more people had health insurance, hospitals would have less uncompensated care to subsidize. This would also likely lead to a reduction in cost for those that pay health insurance premiums. However, until we provide a solution for the state’s working poor, hospitals will be more concerned with protecting CON to maintain access to care.

But CON is not just about the economic interests of hospitals. Countless studies and medical literature overwhelmingly show that volume equals quality. That is to say, the more heart procedures that a facility performs, the better the outcomes that facility achieves. Eliminating the CON program could lead to a proliferation of services that reduces volume at certain facilities, thereby reducing outcomes. For hospitals, CON is not only about protecting access, but also quality. That’s the importance of CON.

Documents and Resources