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The Impact of Certificate-of-Need Laws on ASC Growth

Certificate-of-need laws, mandating government approval for healthcare facility construction, pose a significant impediment to the growth of Ambulatory Surgery Centers (ASCs) across various markets. While efforts to revise these laws are underway in many states, some still present formidable obstacles for ASC leaders.

Philip Blair, CEO of Surgery Center Services of America, emphasizes the ongoing challenges in states with stringent certificate-of-need laws, stating that reform could be a game-changer, leading to a surge in ASCs and a subsequent reduction in healthcare costs.

Certain regions, such as the Northeast, have experienced restricted ASC growth due to these regulations. Prashanth Bala, Vice President of ASC Operations at Shields Health Care Group, notes that most New England states require a certificate-of-need or determination-of-need for ASC establishment, resulting in a lower per capita ASC presence compared to other parts of the country.

Here are three instances highlighting the hindrance caused by certificate-of-need laws:

  1. SurgNet, a Nashville-based ASC management company, faces challenges growing in its home state of Tennessee due to certificate-of-need laws. Despite making two acquisitions in its initial two months, expanding into other states is proving difficult due to regulatory constraints.

  2. Ophthalmologist Jay Singleton, MD, based in New Bern, N.C., is challenging the state's certificate-of-need laws through a lawsuit. He contends that these laws prevent him from performing a significant number of procedures at his ASC, forcing him to conduct surgeries at a nearby hospital with higher procedural costs.

  3. In May, Hartford HealthCare secured approval to acquire two ASCs in Connecticut, but stipulations from the Office of Health Strategy, including a ban on facility fees, were imposed. This case illustrates the complexity and additional conditions involved even when a certificate of need is granted.

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