Deregulating CON could increase health care costs and destroy safety-net system

February 6, 2008

TALLAHASSEE, Fla. – Associated Industries of Florida’s Florida Hospital Council (FHC) today advocated the continued need for the state’s Certificate of Need (CON) requirements for hospitals. Included in Governor Crist’s 2008 budget proposal is a recommendation to deregulate the CON process.

“Eliminating CON would encourage the building of potentially unnecessary hospitals which only offer limited services,” said Barney Bishop, president and CEO of AIF. “These so-called “boutique” hospitals, would only lead to high cost, inefficient health care facilities, which will force existing hospitals who serve the masses to raise rates to compete.”

Governor Crist has asked the Agency for Health Care Administration (AHCA) to draft a bill that would eliminate the CON process. CON was established in 1973 to prevent the unnecessary duplication of health care services and facilities by requiring providers to obtain state approval prior to incurring significant capital expenditures or initiating new services.

“These regulations were put in place to ensure health care, an issue consistently polled as one of the top concerns for Floridians, remains affordable and of the highest quality,” said Bob Broadway, FHC chairman. “By allowing specialty hospitals to compete against full-service hospitals and cherry pick the paying patients, the full-service hospitals will be forced to make up for the revenue shortfall, which will lead to increased health care costs.”

The Florida Hospital Council points to key issues for consideration:

  • Health care is not a commodity or retail business
  • Unlike restaurants and car dealers, hospitals are required to give away its services to people who can’t afford to pay. Hospitals are required by federal and state laws to provide care in all urgent and emergent circumstances regardless of whether the patient can pay.
  • It will increase health care costs

Three major automobile manufacturers have commissioned independent studies that demonstrate that the costs of health care are significantly higher in states without CON regulation. Deregulation does nothing to ensure that those who need care the most- the uninsured and indigents- are actually getting it

  • It will make the nursing shortage crisis worse
  • For the past decade Florida has been experiencing a serious shortage of doctors and nurses as well as other allied health professionals. FHC asks, “Who will staff these new facilities and at what cost to the states existing hospitals?
  • Boutique hospitals will destroy the safety-net system

In states which have abolished CON, the proliferation of specialty and boutique hospitals, has siphoned away the better paying patients from community and safety-net hospitals and has left these facilities with the burden of providing low revenue services for the medically underserved, which has strained their ability to sustain their operations.

“Hospitals strive to provide the best health care possible despite the burdensome regulations under which they operate,” added Broadway. “With the growing number of uninsured persons in Florida, providing healthcare becomes even more challenging.”

The Florida Hospital Council was organized in 2007 for the purpose of bringing attention to concerns and special issues hospitals face as major providers of health care in the state.