Certificate of need laws — regulations intended to control hospital capacity expansion and improve quality of care — may not have their intended effect, according to a Northwestern Medicine study published in JAMA.
There were no differences in the quality of care or the concentration of care to high-volume centers between states with and without certificate of need laws. The focus on healthcare quality improvement and concentrating complex care in high-volume centers have largely ensured that the intended effects of these laws have occurred regardless of whether the state had these laws in place, according to Karl Bilimoria, MD, the John Benjamin Murphy Professor of Surgery, director of the Surgical Outcomes and Quality Improvement Center (SOQIC) and senior author of the study.
“These laws may not be resulting in improved care quality because we have so many other factors that have been more powerful at improving quality and leveling the playing field,” said Bilimoria, who is also vice president for quality at Northwestern Memorial Healthcare, vice chair for quality in the Department of Surgery, professor of Medical Social Sciences and a member of the Robert H. Lurie Comprehensive Cancer Center of Northwestern University.
Thirty-five states and the District of Columbia maintain some kind of certificate of need program, regulations to restrict unnecessary expansion of hospitals or service lines. According to Bilimoria, the driving motivation behind these laws is to prevent over-expansion in wealthier areas, concentrate complex procedures in large hospitals and ensure access to care everywhere.
“Cardiac surgery reimburses well, for example, so health systems may try to open up cardiac surgery centers in geographies that have a good payer mix,” Bilimoria said. “These laws were initially intended to try to limit that.”
However, healthcare delivery has changed substantially since the introduction of these laws in the 1980s and 1990s. Notably, healthcare quality measurement has expanded, with oversight agencies publicly reporting and financially incentivizing quality and payers directing complex patients to larger, more capable hospitals.
At the urging of the Trump administration, several states are attempting to or have successfully repealed their certificate of need laws, so Bilimoria and colleagues were interested in measuring the laws’ impact.
Using Centers for Medicare & Medicaid Service data, the investigators examined over 1.5 million Medicare beneficiaries who underwent a broad range of hospital surgical procedures in all 50 states and Washington, D.C. Outcomes included hospital procedure volume, market share, number of low-volume hospitals and postoperative outcomes.
The investigators found no association between certificate of need laws and any of those outcomes – there were no significant differences between states with and without certificate of need regulations. This signals that these laws have been supplanted by other regulations and market forces. It doesn’t, however, mean they should all be repealed, according to Bilimoria.
The laws may still have use as a “backstop” to prevent unnecessary or inappropriate expansion rather than to improve quality, and could be tweaked to better fit that goal, he explained.
“The main change we are calling for is that policy makers revisit what the goals of these laws are in the modern era,” Bilimoria said. “How can we ensure that they are structured in a way that they achieve these goals without extraneous red-tape regulations?”
Tarik Yuce, MD, resident in the Department of Surgery and a research fellow in the SOQIC, was the lead author of the study.