Lawmakers Debate CON Commissions Continued Viability

March 25, 2002
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LANSING — Regulations that govern health care capital investments and clinical services in Michigan are under attack on a new front — the state agency charged with carrying out and administering the rules.

Setting the stage for a potentially contentious debate this spring and summer, a deputy director of the Michigan Department of Community Health told lawmakers last week that the state’s Certificate of Need program doesn’t work as intended and needs serious reforms.

“CON is out of touch with market forces and the reality of changing demographics in Michigan,” Carol Isaacs, deputy director of health legislation and policy development for the department, said in testimony Jan. 29 before a House subcommittee that’s looking into whether and how to change, and perhaps even eliminate, certificate of need.

“We need major changes in the CON program,” she said.

Isaacs stopped short of advocating for the elimination of CON, saying that was a decision for the Legislature to make, but painted a harsh picture of a regulatory program that’s cumbersome and costly for health care providers, hasn’t kept up with an evolving industry and technology and essentially ignores the needs of patients.

“The CON program is not focused on the patient,” Isaacs told the subcommittee, chaired by Rep. Barbara VanderVeen, R-Allendale. “The health care system has changed so significantly, that CON is unable to effectively carry out its intended mission to balance cost, quality and access to ensure that only needed services and facilities are developed in Michigan.”

The hearing was the first of five the panel plans to hold this year to take comments on CON, a program the state formed in 1978 to provide checks and balances over health care spending. CON standards require hospitals and other health-care providers to demonstrate a market need to proceed with a major capital improvement or provide certain clinical service.

The goal is to avoid the costly duplication of clinical services within a given market and that they are adequately accessible throughout the state. Critics, however, say the program has not changed with the industry and stifles competition.

The subcommittee decided to look into CON after hearing numerous complaints about the program last summer when it held a series of hearings concerning the cost of health care, VanderVeen said. Many people called for the total elimination of the program, she said.

“This is a very complicated subject, so we’re going to take our time and go through it thoroughly,” VanderVeen said.

One member of the subcommittee, Rep. Mark Jansen, R-Grand Rapids, expects to see legislation this summer to reform CON. Even before the subcommittee began looking into CON, Jansen held the belief that changes in the program are badly needed.

“We just can’t let it hang there and do nothing,” Jansen said.

The Michigan Medical Society has long advocated getting rid of CON, as 14 other states have already done. Sen. Glenn Steil, R-Grand Rapids, introduced legislation last fall to follow their lead.

Isaacs cited a 1998 Duke University study the concluded that states which have eliminated CON have not seen the kind of proliferation of health care facilities — a contention that backers of CON reject — nor have those states experienced any increase in health care spending.

She also cited problems with PET and MRI scanners as an example of how CON in Michigan has not kept up with the times.

Patients requiring an MRI often have to wait several days, if not weeks, to have the procedure done if it’s not an emergency because there are not enough licensed devices to keep up with demand. Physicians who want a PET scan for their patients now have to send them to southeast Michigan, where the only three scanners licensed in the state are located.

The CON Commission addressed both problems late last year when it approved new standards for both MRI and PET that will substantially increase the number of available licenses for the devices.

But Isaacs contended the process to change CON standards is often tedious, taking several months if not a year or more. The PET changes only came after state Sen. Bill VanRegenmorter, R-Jenison, pushed the issue by having language attached to the Department of Community Health’s appropriations bill that forced the agency to take up the issue immediately.

Even when the CON Commission does begin to update standards, the ad-hoc committees formed to draft new rules are stacked with “special interest groups” representing health insurers, the auto industry, unions, hospitals and the statewide business-labor coalition Economic Alliance for Michigan.

“It doesn’t lend itself well to consumers,” Isaacs said.

State Rep. Stephen Adamini, a Democrat from the Upper Peninsula, took issue with Isaacs’ special interest swipe. He contended that the auto industry, as a major employer and economic force in Michigan, has a rightful role in setting CON policy, as do other organizations that either provide or are major purchasers health care.

“Are they not legitimate participants?” Adamini said. “It’s like you’ve got to be against CON because look who’s for it.”

Privately, backers of CON say that any problems rest with the Department of Community Health and how it administers the program, a point they intend to press at subsequent subcommittee hearings.

While few, with the exception of the state medical society and some Republican lawmakers, publicly advocate for CON’s elimination, even supporters of the program acknowledge that it could use changes to make the process work better.

“We’d rather work through the problems,” said Patrick Foley, director of communications for the Michigan Health and Hospital Association. “We’d be better off with it than without it.”

The association, in a Jan. 29 letter to VanderVeen’s subcommittee, called CON “a means of fostering a quality health care system that is efficient, accessible and economical.” The letter also cited the experience in Ohio, which repealed CON in the mid-1990s and saw a “proliferation of for-profit specialty clinics that undermine the financial stability of non-profit community hospitals,” particularly in rural areas.

Isaacs, however, referred to Ohio’s experience as the “rightsizing” of the health care system following CON’s elimination, stemming from a pent-up demand for services.                

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