For health care providers, adding a major piece of equipment or expanding services can come with a hefty price tag. Most large providers – including those in Wilmington – can afford, for example, an MRI system, which, according to the medical-equipment company Excedr, costs about $1.2 million. High-end systems are close to $3 million.
But just because a provider believes it needs – and can pay for – certain high-end equipment and new services doesn’t mean it will get them. That’s because the state operates under a Certificate of Need (CON) process. Though it plays out almost completely behind the scenes, it’s a contentious issue in the health care industry.
So what are Certificate of Need systems? According to the National Conference of State Legislatures (NCSL), CONs are “state regulatory mechanisms for approving major capital expenditures and projects for certain health care facilities.”
In North Carolina and 34 other states, a planning agency must approve certain projects, such as establishing a new health care facility and expanding service capacity. The agency also must sign off on the purchase of certain equipment.
According to the NCSL website, “CON programs primarily aim to control health-care costs by restricting duplicative services and determining whether new capital expenditures meet a community need.”
According to James Bailey, a contributor to the North Carolina-based libertarian John Locke Foundation, the state requires CONs in six health care categories – tying with five other states in covering the most areas.
The John Locke Foundation and other libertarian think tanks have vocally called for ending or significantly reforming CON laws.
“CON reform in North Carolina would mean that health care providers, rather than state bureaucrats, could decide where new health services are needed,” Bailey writes in his essay Certificate of Need in North Carolina: Cost, Access, Treatment. “The evidence shows that this would mean more health facilities, better access to care, and lower costs.”
Public hospitals have argued that they are better positioned to serve the larger public and are at a disadvantage in the market because they are required by law to provide certain care, regardless of a patient’s ability to pay.
Certificate of Need applications rarely make headlines, but what’s going on behind the scenes can pit providers not only against state agencies but also each other.
In the Wilmington area, a handful of providers either have an active application or recently completed the process for one: Novant New Hanover Regional Medical Center as well as Novant Brunswick Medical Center, Wilmington Health, EmergeOrtho, Delaney Radiology and McLeod Health Brunswick.
In North Carolina, a government agency produces a yearly State Medical Facilities Plan (SMFP). The plan provides policies and projections of need for certain facilities, services and equipment. According to the issuing agency, the goal of the SMFP is to “make certain that health care facilities and medical equipment are developed only when needed.”
Once it is published, health care providers essentially must match their plans with what is laid out in the SMFP, which is broken into regions. If a regulated level of capacity, service or piece of equipment is not in the plan, providers are not allowed to add it.
If those items are in the plan, providers can apply to be the one that offers it. Sometimes the request sails through with no or little objection from the state. At times, however, there are multiple providers applying for a service that is limited to only one provider.
For example, the current SMFP allocates an additional MRI system for the Wilmington region. Novant New Hanover has applied for it to be used at the 66-bed hospital it is building in Scotts Hill, which according to a Novant spokesperson, is targeted to open in late 2024.
But NHRMC is not the only local provider that wants the MRI service: Wilmington Health, EmergeOrtho and Delaney Radiology also want to provide the new service.
The providers not only lay out a case for why their application should be approved, they often file dozens of pages of comments arguing why the other applicants should not be approved.
While health care providers play nice with each other in public, the CON process is one of the times when the competition can be strong.
In addition to the MRI system for the Scotts Hill hospital, Novant has several other applications, including additional services and equipment at Novant NHRMC and Novant Brunswick Medical Center.
The Winston-Salem-based private nonprofit health system said the additions are needed to meet the area’s rapid growth.
“With the significant population growth in our region, Novant Health continues to keep a forward-looking focus on ensuring we meet the healthcare needs of the communities we serve,” according to an email from a spokesperson. “Novant Health has also committed to make significant investments in facilities and to fund strategic capital needs in the years to come.”
Each application is considered separately, and some receive a public hearing. North Carolina’s system, which was put in place by the General Assembly, also allows for appeals. Applications and all related materials – including the latest SMFP, a 437-page document – are available at info.ncdhhs.gov/dhsr/coneed