Florida Repeals Certificate of Need Laws

ERDMAN ALERT:

Florida Repeals Certificate of Need Laws

During the last week of the legislative session, Florida lawmakers passed legislation that will repeal the state’s certificate of need (CON) laws. The Senate voted 23-17; and the House voted 81-34 in favor of the bill.1

Differing versions of the legislation were proposed by the two chambers, related to scaling-back the laws or outright repeal. The enrolled bill was expansive, devoid of the Senate’s proposed restrictions, and awaits the signature of Governor DeSantis.

Presuming the bill becomes enacted, hospitals and tertiary care will no longer be subject to the state’s CON laws, effective July 1, 2019. And, beginning in 2021, CON laws will no longer apply to specialty hospitals. However, nursing homes and hospice care will still be subject to CON regulations.

Industry experts are watching closely as Florida may be the latest to revoke their CON laws. Other states, already considering changing policy, may be prompted to move on their pending legislation. Currently, Georgia, North Carolina, South Carolina, and Tennessee have proposed legislation in their state Houses that would limit or fully repeal CON laws.3

The common reasoning for states to repeal their CON laws is to restrain consolidation and promote competition. The Department of Health and Human Services (HHS) issued a report recommending state policy changes, specifically, “scale-back or repeal” CON laws due to “higher healthcare prices and fewer incentives for providers to improve quality.” It is expected this guidance will influence federal policy that will “significantly expand the ability of states to reform their individual insurance markets while ensuring that people with pre-existing conditions are protected.” 4

THE ERDMAN VIEW:

The news from Florida highlights the trend that CON law repeal is poised to gain traction. Health systems in Florida and beyond will need to consider these changes and adapt their planning processes. Agile response to the new competitive latitude allowed in CON-repealed states and planning ahead where repeal is predicted will be imperative. Taking a perspective that prioritizes lives captured, even if market selection crosses state lines, will help guide effective competitive strategizing.

See the January 2019 ERDMAN Alert, “Certificates Of Need: Implications For Hospital And Health System Planning,” for analysis on this trend and planning imperatives.

ERDMAN-ALERT-FL-CON_Policy-Developments-Call-Out-Update2

Resources Cited

  1. CS/HB 21: Hospital licensure, 2019. https://www.myfloridahouse.gov/Sections/Bills/floorvote.aspx?VoteId=18553&BillId=65613&SessionId=87&.
  2. Koh, E. (Apr. 29,2019). “State politics: FL lawmakers pass broad healthcare changes easing hospital rules, adding drug imports.” Miami Herald. https://www.miamiherald.com/news/politics-government/state-politics/article229719314.html.
  3. Looney, K.H.; Trotter, Z.D.; Fitzgerald, P. (Mar. 11, 2019). “Several Southeastern states seek to eliminate or relax Certificate of Need laws.” Waller Law Blog. http://www.wallerlawblog.com/post/642/several-southeastern-states-seek-to-eliminate-or-relax-certificate-of-need-laws-/.
  4. U.S. Department of Health and Human Services; U.S. Department of the Treasury; U.S. Department of Labor. (Dec. 3, 2018) “Reforming America’s healthcare system through choice and competition (Memo).” https://www.hhs.gov/about/news/2018/12/03/reforming-americas-healthcare-system-through-choice-and-competition.html.

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