Certificate of Need (CN) is a state law requiring the Washington State Department of Health (DOH) to review certain service expansions to make sure there are not too many competing services in one area. According to the state’s website, “The Certificate of Need process is intended to help ensure that facilities and new services proposed by healthcare providers are needed for quality patient care within a particular region or community.”
In other words, Certificate of Need is a permit process for new health care services and facilities. According to a legislative audit, the DOH reviews proposals for health care facilities and services to ensure the proposals:
* Meet a community need;
* Will provide quality health care services;
* Are financially feasible; and
* Will foster containment of health care costs.
Some people like CN because it helps existing providers be more financially stable by keeping competitors out of the service area. Other people do not like it because the review process can be long and unpredictable, making it hard to expand to meet new service needs.
CN review is required for a variety of activities, including construction or establishment of a new health care facility, increases in the number of beds at a hospital, nursing home, or hospice care center, offering new tertiary health services, and some nursing home activities. More information on Washington’s CN program can be found on the Certificate of Need program website.
WSHA v. Washington State Department of Health Lawsuit (2015)
For the last 20 years, the Department of Health (DOH) has reviewed the sale, purchase, or lease of a hospital according to the plain language of the Certificate of Need law calling for review of a “sale, purchase or lease.” Other changes in control, such as mergers and affiliations, did not change the services available, so the DOH determined that a new Certificate of Need was unnecessary.
In fall of 2014, the DOH re-interpreted the CN law and rewrote its rules to require review of all “changes in control” of any “part” of a hospital—even if the service themselves weren’t changing.
This would have required more hospitals and other health providers to go through a long, expensive, unpredictable permitting process that could only reduce patients’ access to services. The state Supreme Court ruled on July 9, 2015 that the state’s rule changes went beyond the scope of the underlying law and that those rules were no longer valid (see the press release here).
