Indiana lawmaker wants to bring back hospital ‘certificate of need’ process

A state lawmaker says he is concerned that a flurry of hospital construction, especially near wealthy neighborhoods, is driving up the cost of health care, and he wants to bring back the “certificate of need” review process, which Indiana repealed about two decades ago.

Indiana Sen. John Ruckelshaus, R-Indianapolis, said he wants the state Department of Health to review any plans to build new hospitals to see if they are truly needed.

“There is a body of evidence that the clustering of hospitals in a very small geographic area—sometimes called the high-net-worth rooftops or ZIP codes—is driving up health-care costs,” he said. “I personally don’t know that. But clearly, in this environment we’re in right now, this is a major issue.”

Ruckelshaus, the second-ranking Republican on the Senate Health and Provider Services Committee, said Thursday he is drafting a version of the bill and plans to introduce it in the next week or two. The review process would apply only to new hospital projects, not to additions at existing hospitals or the purchase of expensive hospital equipment.

The committee’s chairman, Sen. Ed Charbonneau, declined to say whether he would support the bill, saying he had not yet seen it.

Ruckelshaus said his bill was prompted by residents near the intersection of Spring Mill Road and West 96th Street in Carmel, where St. Vincent Health recently bought 30 acres for an unspecified project. St. Vincent has not said what it plans to build there, but some of the neighbors fear it could include a large, full-service hospital, with a 24-hour emergency room, a trauma center and helicopter landing pads.

The neighbors say Carmel is already saturated with hospitals and does need any more.

Sally Page, president of the Belle Meade Homeowners Association, just south of the St. Vincent site, said her neighborhood opposes a large, new hospital in the area, and hopes that the Indiana General Assembly passes Ruckelshaus’ bill.

“If passed in time, this statute could delay or even stop the 96th Street project,” she said in a statement.

She said St. Vincent already has a Level 1 trauma center about three miles away, on West 86th Street. St. Vincent also has a heart hospital about 1-1/2 miles north and a full-service St. Vincent Carmel Hospital five miles to the north. Indiana University Health operates its North Hospital three miles north. Several other specialty hospitals also are located within a few miles, and more are under development.

Under the certificate of need process, health systems would be required to demonstrate to the state Department of Health that their project would meet an unmet need.

Indiana repealed the certificate of need requirement in 1994, but last year passed a law requiring that new nursing-home projects get a certificate of need, with a few exceptions, such as for certain religious or fraternal organizations operating facilities mainly for members.
 
The Indiana Hospital Association said it would oppose a move to reinstate the certificate-of-need process for hospitals.

“There’s no indication that certificate of need for hospitals reduces costs,” said Brian Tabor, the association’s president. “In fact, there’s quite a bit of evidence to the contrary that it increases bureaucracy, legal costs and can actually drive up costs.”

Most states still require a certificate of need for new hospital projects, according to the National Conference of State Legislatures. Many of the state laws were put into effect as part of a federal law in the 1970s, aimed at restraining health care costs by coordinating planning of new services and facility construction.

Some states, including Wisconsin and New Hampshire, have recently ended their certificate of need requirements.

Indiana has seen a boom in hospital construction in recent years, including new hospitals in Bloomington, Brownsburg and Shelbyville, and a flurry of “micro-hospitals,” free-standing emergency rooms and urgent care centers.

The hospital industry said the projects are needed, either to replace dilapidated buildings or to provide care in alternative, low-cost settings or with better technology.

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