The 84 Million Question

December 2, 2005
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GRAND RAPIDS — A pair of meetings in the next two weeks could determine whether proposals for eight new freestanding surgery centers in West Michigan go on to fruition, or back to the drawing board.

The centers, alternately known as ambulatory surgery centers or simply “surgicenters,” range in construction costs from Metro Health’s $6.5 million project in Comstock Park to a $21 million project from West Michigan Surgery Center in Big Rapids. All told, there was more than $84 million in new medical construction on the Alliance for Health’s public hearing agenda last week, including two centers each in Grand Rapids, Muskegon and Holland.

Discussion at the Nov. 28 meeting was sparse. Terrence O’Rourke, vice president of business development for HackleyHospital in Muskegon, went on the record to reiterate his support for his hospital’s planned $13 million surgicenter. O’Rourke said that the Hackley facility, unlike a competitor’s proposed surgicenter, would transfer surgical cases from the hospital’s current operating room. He said that 90 percent of the competitor’s surgical procedures could be done in a setting outside the operating room.

That matters because of potential changes in the state laws that regulate how certificates of need (known as CONs) are awarded.

“The proposed CON Review Standards for Surgical Services are being reviewed and modified to require that all volume projections are developed and documented based on only surgical cases performed in an existing operating room,” according to the state’s certificate of need commission. Since projects of this nature can’t go forward without a certificate of need, that single sentence from the commission could have a major impact on the number of freestanding surgical centers allowed in the state.

When a would-be surgicenter applies for a certificate of need, it must make an estimate of the volume of surgical procedures it expects to handle. Two changes in the wording of the review standards could make it much more difficult for start-up surgicenters to win approval. First, the volume would be judged on the number of surgical cases, not surgical procedures. In other words, if one patient undergoes three procedures during a given visit, that would count as only one surgical case, not three. The other change insists that the applicants can count toward their surgical case volume only those procedures that would otherwise have been done in a licensed operating room. Many procedures are done outside of the operating room setting and would therefore not count toward the 1,200 surgical cases an applicant must demonstrate in order to be approved for a certificate of need.

The Michigan Department of Community Health Certificate of Need Commission will convene Dec. 13 for a meeting that could determine the future of those standards. The commission’s decision on the ratification of the amended review language could affect the Alliance for Health’s Dec. 15 meeting to make recommendations on the eight local applications.

At the Nov. 28 meeting, Alliance President Lody Zwarensteyn hinted that several of those eight may not have appropriate documentation to satisfy the stricter standards. Those proposals would then have to be reconsidered or scrapped. Some of the proposals may not yet be complete enough to be considered at the Dec. 15 meeting regardless of the state commission’s decision. And some of the applications could leave the meeting with the Alliance’s stamp of approval.

However, a green light from the Alliance does not mean that the project would necessarily be in the clear. If the department of community health decides to alter the standards by which certificates of need are awarded, the process would have to be formalized by the state legislature and the governor. Any changes enacted by the state could mean that current surgicenter applicants would have to file additional materials in order to satisfy the new requirements. However, the state government won’t likely ratify the changes until well into the spring of 2006. That might mean that the current applicants on file with the Alliance could get their projects approved under the current standards.    

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