HD25 - Annual Report on the Status of Virginia's Medical Care Facilities Certificate of Public Need Program


Executive Summary:
This annual report to the Governor and the General Assembly of Virginia on the status of Virginia's Certificate of Public Need (COPN) program has been developed pursuant to § 32.1102.12 of the Code of Virginia. The report is required to address the activities of the program in the previous fiscal year, review the appropriateness of continued regulation, at least three specific project categories, the issues of access to care by the indigent, quality of care within the context of the program, and health care market reform. A copy of the enabling Code section is reproduced at Appendix A. This report includes data for the most recent fiscal year (FY) (2001) as well as FY (2000). Administrative turnover precluded the Virginia Department of Health (VDH) from completing the FY 2000 Annual Report. In addition, staff effort was directed toward providing technical assistance to the Joint Commission on Health Care's study committee developing a plan to eliminate COPN as a result of the passage of Senate Bill 337 in 2000. Had the FY2000 report been completed, it might have conflicted with the study committee's recommendations. Thus, the most recent data from FY2001 will be presented first, followed by the FY2000 data.

For the years covered in this report, the State Health Commissioner issued 158 decisions, authorizing 140 projects at a total expenditure of $1,151,398,205 and denied 18 projects with proposed capital expenditures totaling $44,539,428. (See Appendix C for a summary of these decisions.) Additional program activities are described in the "Summary of the State Health Commissioner's Actions" beginning on page 2.

The project category analyses for FY 2000 and 2001 contained in this report include radiation therapy, lithotripsy, obstetrical services, neonatal special care, psychiatric services, substance abuse services, and miscellaneous capital expenditures. The section addresses the history of COPN regulation for these project categories, the current relationship between supply and demand for these facilities and services, the perceived benefits and costs of continuing regulation in these specific categories, and the likely consequences of eliminating or modifying COPN regulation in those areas. Recommendations concerning the selected project categories are:

1. Issue a Request for Applications (RFA) for additional radiation therapy services based on a collaborative review with affected parties to determine the need for and location of additional services. Though this would require a legislative change, it would meet the planned need for new services in appropriate planning districts in a market competitive manner and improve access;

2. Support efforts to deregulate COPN for lithotripsy. Regulation and restriction of this relatively low cost service provides little benefit to the public;

3. Support efforts to deregulate COPN for obstetrical services. The urban and suburban market appears to be well served with regards to obstetrical care. There has been little interest in the further development of obstetrical services in rural areas, which is where, if at all, the service remains in short supply;

4. Issue a Request for Applications (RFA) for additional neonatal special care services based on a collaborative review with affected parties to determine the need for and location of additional services, therefore assuring access where needed. Though this would require a legislative change, it would meet the planned need for new services in appropriate planning districts in a market competitive manner and improve access;

5. Support efforts to deregulate psychiatric services. There are typically few to no requests for psychiatric services and the service falls under the auspices of the DMHMRSAS, which favors deregulation of their services from COPN;

6. Support efforts to deregulate substance abuse services. There are typically no requests for substance abuse services and the service falls under the auspices of the DMHMRSAS, which favors deregulation of their services from COPN; and

7. Continue to review all capital expenditures of $5 million or more to assure appropriate use of limited health care dollars, with the exception of expenditures for parking structures and road improvements.

Compliance with the conditions to provide charity care remains relatively poor. A detailed chart of charity care provided through 1999 by hospitals within each planning district can be found in Appendix G. However, this is the first year that compliance with the conditions of COPN will be considered during the annual licensure renewal of hospitals and nursing homes.