The Certificate of Need process was imposed by the Federal government via the National Health Planning and Resources Development Act in 1974. This act was an attempt by Congress to reduce national health care costs. This Act was repealed in 1986 because lawmakers found that this mechanism failed to effectively control skyrocketing health care costs.
Since that time many states have reduced or completely eliminated their CON programs.
14 states do not have a CON process at all
4 states have limited the CON process to no more than two services.
8 states do not mandate CON for acute care or ambulatory surgical centers.
Projects in these 26 states are eligible for FHA funding and are not required to produce a certificate of need.
The Federal Trade Commission and the Department of Justice issued a report in July 2004, based on a series of 27 hearings and workshops with experts, which recommended that states reconsider their CON process on the basis that it does not control health care costs and is used by market incumbents to create barriers to competition. The American Medical Association also took an official stance in December 2004, encouraging states to limit the use of the CON process.
The NCMC will undergo an extremely rigorous evaluation by the federal government in order to obtain financing from the Department of Housing and Urban Development. FHA’s feasibility analysis will be conducted by an independent CPA firm with experience in the hospital industry. It will require a market need analysis, analysis of impact on competitors, and a certification of financial feasibility based on Howard University Hospital’s past performance and projected operations of the NCMC.
The District’s CON law, written by Hospital Association lobbyists, is a political process used by existing hospitals to protect their market share by blocking new entrants from coming into the DC health care market and slowing the entry of new and improved services.
Opponents of the NCMC are using CON as a stall tactic. The current District CON law allows three layers of appeals. Decisions can be appealed by any interested or affected party. Appeals have lasted up to five years. If the NCMC is delayed for five years costs will increase exponentially.
Council has exempted controversial projects from CON at least twice before. An exemption was granted in September 200 for the closure of DC General and the transfer of some of its services to Greater Southeast Hospital. Another exemption was granted when Doctors Community acquired Greater Southeast Community Hospital in December 1999.
