AGENCY STUDIES COST, NEEDS OF PROJECTS

A state law enacted more than two decades ago, designed to preserve and improve health-care funding, is still in operation, monitoring proposed projects that cost millions of dollars annually.

The program, known as the Missouri Certificate of Need Program, is supervised by a nine-member, non-salaried committee, composed of private health-care experts and four members of the General Assembly.

Under this panel's direction are nine additional staff members who process applications and provide information relating to proposed expenditures by hospitals, nursing homes and diagnostic and treatment health clinics throughout the state.

Missouri's program came into existence following congressional approval in 1974 of PL 93-641, which requires states to monitor, supervise and exercise control over new health-care projects that have an impact on Medicaid funding.

The federal regulation was also in response to a growing concern for rising health costs and more facility construction expenditures.

The regulation was also to check the ultimate impact of the health and facility costs and their overruns on both federal and residential care facilities.

The program's oversight commission approved 50 of the 57 projects without change, ordering four others to reduce their projected cost estimates and denied outright a single application. Two others were withdrawn before agency action could be taken.

Before final approval, cost reductions ordered among the 57 applications resulted in $22.9 million in "savings," a term that takes into account the additional public funding these institutions would require upon completion. These estimated savings are also computed by considering the impact such new facilities would have on a community's existing health-care services, particularly in instances were new facilities would create unneeded duplicate availability.

Although 1999 saw a large number of certificate of need applications, with an average cost of $3.9 million, the average cost of projects in the previous year was far greater, reaching $5.7 million. The estimated "savings" in 1998 was $93 million.

Thirteen of last year's 25 hospital projects reviewed state budgets.

Missouri's' original certificate of need statute became effective Sept. 18, 1979, and was operational on Oct. 1, 1980. The statute empowers the certificate of need program to "address issues of community need, accessibility, financing and other community health service factors, plus continuing concern about high health-care costs."

The statewide health planning agency became an administrative unit of the Missouri Department of Health in 1981.

In the calendar year 1999, the certificate of need program reviewed 57 applications, with proposed capital costs of $222.2 million. The application categories included hospitals, nursing homes, freestanding medical and health clinics, residential care facilities and two requests to grant capital cost overruns of previously approved projects.

Health-care proposals costing less than $1 million in capital construction and less than the same amount for equipment are not subject to the program's approval or rejection, but these projects must be submitted to the agency for informational purposes. In 1999, 109 non-applicability projects, with a total cost of $79.5 million, were recorded, with one withdrawn for technical reasons.

The past year 57 certificate of need applications included the acquisition of major medical equipment, such as MRIs (9), cardiac catheterization labs (2), and linear accelerators (2), Seven hospital projects included renovation, modernization and expansion of existing services.

From 1991 through 1999, a certificate of need staff member reports "savings" of $916 million, with the greatest yearly amount occurring in 1993 when some $183 million was categorized as that year's saving.

The agency's rules contain required, detailed information available to potential applicants to help them respond to three review criteria: community need for the proposed services; financial feasibility of the proposed service and availability of less costly and more effective alternatives.

The governing review committee, representing the public and the General Assembly, is headed by Patrick R. Brady, Kansas City, a health care consultant and retired executive vice president of the Humana Corp. The state legislators include Sen. Mary Groves Bland, Kansas City, and Reps. Jim Murphy and Quincy Troupe, both of St. Louis., Sen. Anita Yeckel, also of St. Louis, resigned from the panel earlier this year and her replacement has not yet been named by the state Senate leadership. Legislators assigned to the committee are named on a bipartisan basis. Private-sector members are appointed by the governor.