Existing State Hospital Oversight Inadequate for Era of Hospital Consolidation, Closures
new national survey by MergerWatch concludes that state oversight of hospital consolidation is woefully inadequate to protect community access to needed health services. State Certificate of Need (CON) programs were enacted during an earlier era of hospital expansion, with the primary purpose of guarding against overbuilding, duplication of services and resulting excessive health care costs. Some states have abandoned CON review entirely, as part of a general trend toward de-regulation, leaving consumers unprotected from hospital “merger mania.” In most of the 35 states that still do have CON programs, the review guidelines and process have not been updated to address the current trend of hospital consolidation, downsizing and closing.
The MergerWatch study found, for example, that only 10 states require CON review when a hospital is going to close or if a service would be discontinued.
“patient-focused conditions.” For example, Care New England was required to submit a plan to “replicate Memorial Hospital’s unique alternative birthing experience” at another of the system’s hospitals and ensure low-income women would have transportation to this alternative location.
MergerWatch staff studied the elements of each state’s CON law and implementing regulations to determine its suitability for the current market condition of consolidation. Our research found:
- Only eight states require CON review when a proposed hospital transaction is structured as an affiliation or something other than a merger or acquisition, even though it could mean a new entity would be in control of the hospital.
- Just nine states require consumer representation on the CON reviewing body.
- Only four states mandate that the reviewing body consider written testimony from the public.
What can state and local health advocates do to help ensure consumer voices are heard and community health needs considered when hospital transactions are proposed?
MergerWatch staff have identified model CON policies that would allow for state oversight of a wider range of proposed hospital transactions, such as affiliations, and in circumstances when control of a hospital board is to be shifted to another entity, such as a health system. Review would be required for proposed hospital closings and when services would be discontinued at one or more of the partnering hospitals. CON review boards would be required to include consumers and consumer advocates, and have limits on the number of members who are hospital industry insiders.
Under these model policies, CON review would include an examination of community health needs, as documented in an existing or new needs assessment or state health planning document, and an assessment of how services meeting those needs would be affected by the proposed transaction. There would be much more transparency to the public about the review process and any transactions being reviewed, as well engagement of affected consumers through such mechanisms as public hearings and submission of written comments.
Learn more about these model policies and some action steps advocates can take in their states by joining a webinar that MergerWatch is hosting on June 15 from 3 to 4:15 p.m. Eastern. You can register for this webinar here.
Author: Lois Uttley, Director of MergerWatch Project | Raising Women’s Voices-NY