Special Joint Subcommittee to Study Certificates of Public Need

July 31, 1998, Richmond

During the Senate Committee on Education and Health's consideration of SB 603 of 1998, a commitment was made to examine certain certificate of public need issues. Therefore, the Special Joint Subcommittee to Study Certificate of Public Need was convened by the chairmen of the Senate Committee on Education and Health and the House Committee on Health, Welfare and Institutions in accordance with the authority granted to standing committees and their chairmen by the rules of the Senate and the House of Delegates.

Study Objectives

The first meeting of the joint subcommittee was held as an organizational and informational meeting. This study, as a committee-directed study, did not have written directives from an approved resolution. Therefore, the joint subcommittee approved various objectives for its study as follows:

History of COPN

The subcommittee was provided a brief history of the certificate of public need (COPN) program in Virginia. Some salient points in this history are:

Current Trends

The joint subcommittee was reminded that expansion of managed care has sparked interest across the county in reexamining COPN requirements. New Jersey, for example, has lifted its COPN requirements for initiation of pediatric and maternity service, while keeping the requirement for highly specialized services, such as transplantation and neonatal intensive care units.

Statistics and other information relating to the operation of Virginia's Medical Care Facilities Certificate of Public Need Program were also presented. For example, the numbers of operating rooms in general hospitals (general and other operating rooms), the number of procedures performed, and the hours of usage were detailed from 1995 to 1997 according to the health planning region and planning district. In addition, the special subcommittee received an inventory of ambulatory surgery centers and their utilization. These data demonstrated a general increase in the numbers of procedures performed in operating rooms across the Commonwealth, with some reductions and slow growth also noted.

Many, if not most, general hospitals have outpatient surgery services, and much surgery is performed in practitioners' offices. This trend can be attributed to expansion of managed care, the growth of technology, and the shifts in reimbursement which encourage and favor less-costly procedures. The special subcommittee was also told that general hospitals and ambulatory surgery centers are treated the same way for purposes of establishing need for additional operating rooms. The criteria include utilization of present operating rooms, such as numbers of procedures performed and number of hours of usage.

The subcommittee was also told that Virginia's COPN program is well-considered in the country for its equity and because the same standards apply to all applicants. The COPN program has been repeatedly evaluated by the legislative and executive branch levels. Further, it was stated that supply and demand economics do not work in the health care arena. Several instances of relaxation of COPN laws were given in which the numbers of relevant procedures dramatically increased, necessitating the reapplication of the COPN requirements.

The issues related to COPN include costs, quality, access, and technical competence. Costs of some services are going to be lower if the number of providers of the service is small—MRI services, for example, because the price must include the capital costs for providing the service. The costs of out-patient surgery are generally significantly lower than in-patient surgery. In any case, most facilities do not report the price by procedure because of possible variations according to the time or complications. The costs of in-patient hospital stays are affected by the complexity of the procedure, the costs of indigent care, and the necessity of maintaining intricate and expensive support systems, such as emergency rooms.

Some of the questions posed by the special subcommittee related to the standard for determining operating room utilization; urban congestion, transportation, and distance issues; rural distribution and access problems; the costs of COPN to applicants; and the relationship to providers and patients of reimbursement issues, such as facility's fees as a component of reimbursement for Medicare patients.

Future Meetings

The special joint subcommittee approved a study plan establishing three more meetings. The second meeting is a public hearing on August 25 at 6:30 p.m. in Senate Room B of the General Assembly Building in Richmond.

The Honorable Jane A. Woods, Chair
Legislative Services contact: Norma E. Szakal