'Certificate of need' requirements under review by legislature

JEFFERSON CITY, Mo. -- It's called a "certificate of need" -- the state's way of granting approval for a nursing home to build or expand its facilities.

Adopted as Missouri law 23 years ago, the program's intent was to contain health care costs through a process of community planning capped by state approval. An actual need for a new or expanded nursing home had to be shown, because low occupancy drives up the cost of care. Needless to say, health care costs have continued to rise.

And Missouri's law has continued to regulate big investments in health care facilities and equipment, even as federal funding for the program has dried up and some states have repealed similar statutes.

In a capitalistic society, where grocers or gas stations don't need state approval to expand, the certificate of need law is a fairly unusual form of regulation.

Yet it's one that some conservative, business-minded legislators are pushing to maintain.

Currently, certificates of need are required for construction or expansion of nursing and residential care facilities; construction of new hospitals; and the purchase of medical equipment of more than $1 million.

Some provisions expired

Some of the law's provisions expired last Dec. 31, including those requiring certificates of need for hospital expansions and the construction or expansion of acute care and outpatient surgery centers.

Another section is to expire at the end of this year -- a statewide cap on the number of licensed nursing and residential care beds.

Sen. Betty Sims of Ladue wants to extend that cap for five more years, and revise a provision that lets nursing and residential care homes buy and sell bed licenses among themselves.

Sen. Michael Gibbons of Kirkwood, meanwhile, is among those heading the effort to restore the certificate of need process for outpatient facilities and for hospital renovations of more than $20 million.

Sims and Gibbons are both Republicans. And Gibbons, for one, is well aware that the certificate of need concept sounds contrary to free-market capitalism, in which competition theoretically keeps prices down. But the health care industry is an exception to the capitalistic rule, Gibbons said.

In a competitive market, patients would choose among physicians and hospitals. But because of the prevalence of managed health care insurance plans, patients often don't have that choice. "My concern is that if we don't have some form of certificate of need, the patients -- my constituents -- are going to be paying more for less," Gibbons said.

In the months since part of the law expired, state officials have noticed a jump in hospital renovations and new outpatient surgery centers.

"What it tells us is there is a great interest in expanding health care services," said Thomas Piper, director of the state certificate of need program. "That doesn't mean there is a need for what they are wanting to do. But there is a competitive spirit there."

Sims believes a similar sort of building boom could occur if lawmakers let the moratorium on new bed licenses for nursing and residential care homes expire as scheduled.