Crc News Release

CRC NEWS RELEASE

For immediate release Contact: Stuart Paterson February 24, 2005 (517) 485-9444 Earl Ryan (734) 542-8001

Michigan Certificate of Need Program Reviewed in New Report

The Certificate of Need program (CON) was adopted in the early 1970s to limit the addition of significant health care facilities and services in Michigan. It requires health care providers to receive state certification that proposed capital additions and certain clinical services are needed before they can be initiated or acquired. The purpose of CON is to contain health care costs, assure quality, and improve access to health care. The Certificate of Need program is the subject of a new report by the Citizens Research Council of Michigan.

Although CON was once encouraged and partially financed by the federal government, that changed in 1986 and fourteen states have since dropped the program. The remaining states, including Michigan, that have retained CON operate over a range of stringency in requirements and comparisons are difficult.

The CRC report, The Michigan Certificate of Need Program, provides a history of the program and a detailed review of its structure and operation. It also identifies several issues related to the program and its impact.

“Since the CON program was adopted, there have been significant changes in health care delivery and finance,” said Stuart Paterson, CRC senior research associate. “Reimbursement methodologies involve cost controls that weren’t in place thirty years ago and the intensity and specialization of health care is markedly different. A question exists as to whether CON needs to be revised in order to recognize this.”

In addition, there are differing views of the cost effectiveness of CON. Studies done by DaimlerChrysler, Ford and General Motors show that their per capita health care costs are lower in states with CON than in those without. A 2003 study by Conover and Sloan of Duke University concluded that the degree of cost savings attributable to CON is inconclusive.

Finally, the role of CON in the context of overall state health policy should be examined. “For many years CON was part of a larger work to develop and maintain a state health plan. Very little of that effort remains and there are aspects of health care for which CON is irrelevant,” said Paterson. “CON might be more effective as part of a wider array of efforts aimed at cost, access, and quality.”

The report was underwritten by a grant from the W. K. Kellogg Foundation.

The Citizens Research Council of Michigan is a private, nonprofit public affairs research organization established in 1916 to analyze issues pertaining to state and local government organization and finance in Michigan.

Citizens Research Council of Michigan Main office: 38777 W. Six Mile Rd., Suite 208, Livonia, MI 48152 (734) 542-8001 Lansing office: 124 W. Allegan, Suite 1502, Lansing, MI 48933 (517) 485-9444