71

apparently conflicts with HEW regulations in that it does not cover state facilities. Some state health officials believe that if the state facilities are included, federal facilities, now excluded, should also be included.

The DHEC is now responsible for administration of the CON law. However, Governor Edwards and other officials see the DHEC as a regulatory agency, not a planning body; they plan to support legislation that would create a separate SHPDA. As of now, a single department head is in charge of administering statewide health planning, administering Certificate of Need, and ruling on requests for state licenses.

TENNESSEE

The Tennessee CON legislation, passed in 1973, does not cover all the medical facilities within the state. For example, it does not cover federal health care institutions such as homes for the aged; nor does it cover the facilities of most private practitioners. The legislation was drawn up by the state hospital association which anticipated objections to comprehensive health legislation by the Tennessee Medical Association. Primarily for this reason coverage does not extend to doctors' offices. The legislation does cover all other primary health care institutions, hospitals, nursing homes, and public health facilities, but it has been amended to conform more closely with federal regulations. Now, for example, if a facility wishes to increase its bed capacity, a Certificate of Need is necessary. The CON law also covers any service or facility increase that costs $100,000 or more.

HEW has detailed requirements for notifying the public of proposed projects, but state health officials generally feel that public ads in the media, notices posted in government offices, and letters to directors of projects are sufficient. The Tennessee Health Facilities Commission, the agency responsible for administering the Certificate of Need program, is currently trying to resolve

ese and other difficulties with HEW.

72

TEXAS

In 1975 the Texas legislature established the Texas Health Facilities Commission (THFC) to certify need for health facilities and services in the state. But CON requirements were not incorporated into the first year of the HSA program. In its review and hearing process, THFC did not take into account the recommendations of area health commissions until they were designated as an HSA. This situation caused some hostility towards THFC on the part of local commissioners and planners who felt that their plans, advice, and expertise were ignored.

A discussion with a member of the Texas legislature who was involved in the enactment of that state's CON legislation revealed outright chicanery in efforts to weaken the CON law. On the day of the vote all of the bill's sections were renumbered. As a consequence, legislators who wished to amend the proposed legislation did not know the number of the section they wished to amend. This confusion allowed three important provisions to remain--provisions that weakened the Texas law and reduced the effectiveness of the HSAs.

First, the planning functions and the administration of the CON law are in two separate agencies. The Texas Department of Health Resources, in conjunction with the HSAs, establishes a state health plan. THFC administers the CON law. Coordination between these two relatively independent agencies is a major problem. Once a state plan is established, there is no mandate that requires THFC to follow it. In issuing a Certificate of Need, THFC considers criteria other than the state plan. This can obviously lead to inconsistencies between the certificates issued and the needs as defined by the state health plan.

Second, the provisions for review and comment by the local HSAS have, in effect, been negated by the state Certificate of Need law and its subsequent regulations. Despite PL 93-641 stipulations, the Texas CON program does not require that HSAs review and comment on applications for Certificate of Need. This weakens the state's

73

HSAs because a mandatory review would insure their involvement. Since HSA review is now optional, the potential exists for conflict over each application. The state law says if HSAs choose to participate in CON, they must operate under the state civil procedure and evidence code. This effectively eliminates public participation and requires the extensive use of legal assistance. Under these constraints, some agencies conceivably could use as much as threefourths of their total budget in attorneys' fees. One highly regarded health planner stated, "The intent of the state Certificate 78 of Need law is to destroy the HSAs."

The procedure for review and comment creates a third major problem for the Texas HSAs. Applications for Certificate of Need go to THFC, which reviews the application and dates it if it satisfactorily complies with the rules for the preparation of applications. This must be done within five working days after receipt of the application. A hearing is scheduled after the dating of the application, and the appropriate HSA is sent a copy. The HSA must respond within five days after notification that they wish to review and comment on the application. They then must provide written comments and recommendations within forty-five days. THFC dates the application if they wish to have their comments considered. Obviously, with a thirty-member board it is difficult to assemble a quorum, schedule a hearing, and provide written comments within forty-five days. This time constraint reduces the likelihood of review and comment by the local HSAs and increases the authority and control of the THFC at their expense.

The law also contains loopholes which enable applicants to circumvent the application hearing by the THFC. One provision states "at the request of the applicant and with concurrance of the commission, an uncontested application may be reviewed by and acted on by the commission without a hearing under the rules promulgated by the commission." Many applications would ordinarily be contested, but the procedures and time alloted by THFC are obstructive to

74

those who wish to become a party to the hearing. The time constraints, the elaborate rules, and loopholes which enable applicants to circumvent the hearing process all serve to undermine the capacity of the HSAs to act effectively. If the HSAs in Texas are to serve as important instruments to improve health planning, the state CON law must be amended to conform more closely to federal requirements and basic policy decisions must be given the full attention they require. VIRGINIA

Virginia enacted a state Certificate of Need law in 1973. It requires that health organizations, regardless of ownership, obtain approval of the designated agency to make capital improvements to their facilities or to construct new facilities. medical facilities must meet CON requirements if: 1) Capital expenditures reach $100,000 or more;

2) Changes are made in the bed complement;

3) Additions are made to the services rendered.

Specifically,

This exemp

The Virginia CON law covers most medical facilities for physical and mental health care, including acute and long term facilities. Physicians' offices and first aid stations are exempted. tion enables pathologists and radiologists to add costly x-ray scanners to their office equipment without obtaining prior approval. Some health planners regard the exemption as a major flaw in the Virginia law and they hope it will be corrected. Also, the state law does not entirely conform to federal regulations. The appeal process applies only to applicants until July 1, 1977. If a state CON decision should rule against an HSA, that agency has the right to appeal the decision administratively but not in court.

75

SHPDA AND SHCC: STATE-LEVEL PLANNING

The State Health Planning and Development Agency (SHPDA) is an agency of state government designated by the governor. It receives the reviews and recommendations of the HSAs and administers the state Certificate of Need program for new services and facilities. Based on area health plans, SHPDA prepares a preliminary state health plan which it submits to the Statewide Health Coordinating Council (SHCC).

The SHCC is comprised of at least sixteen representatives appointed by the governor from lists submitted by the HSAs. In addition, the governor may appoint others, including public officials, but these appointments may not exceed 40% of the total membership. A majority of all those appointed must be consumers. The SHCC reviews the annual plan of each HSA and sends its comments to HEW. Its most important function is to prepare annually a state health plan based on the preliminary plan of SHPDA.

Governors have designated SHPDAS in all of the eleven southern states. Currently, in most of these states the SHPDAS are located in the state department of health; in Arkansas, Mississippi, and Tennessee the agencies are part of the governor's office; the remaining three SHPDAS are located in departments of human resources 79 and other state agencies.

In

The most important function of the SHPDAS is the administration of the Certificate of Need program. It is also one of the most difficult functions to carry out. As noted, only seven of the eleven Southern states have Certificate of Need legislation in effect. some of these states conflict continues over the requirements outlined by the state and those specified by HEW for issuing a Certificate of Need. The conflict is based on how broad the CON legislation should be and whether the power to make a final decision on a CON application rests with the HSA, the state, or with HEW.

Preliminary state health plans, prepared by SHPDA, may contain revisions of the health system plans in order to "achieve appropriate