Understanding Certificates of Need

By James Mackler

As their practice grows, many physicians find themselves in a position where they would like to grow and expand their practice but are intimidated by the red tape involved in obtaining approval from the Tennessee Health Services and Development Agency (THSD) for their dream facility. It is important, therefore, for you to have some understanding of the “certificate of need” (CON) program.

What is a “certificate of need?”

A CON is a permit that must be granted by the THSD before a person can establish or modify a healthcare facility.

How does this apply to physicians?

Physicians who simply intend to establish or modify their private professional practice office do not need a CON.

Who will receive the CON?  

The CON is typically issued to the property owner.

What “healthcare facilities” require a CON?  

Senator Mark Green recently introduced House Bill 854, which would remove medical imaging equipment from the requirement to have a Certificate of Need.  As the law currently stands, you will usually need a CON for:

    • • nursing homes
    • • recuperation centers
    • • hospitals
    • • ambulatory surgical treatment centers
    • • birthing centers
    • • mental health hospitals
    • • intellectual disability institutional habilitation facilities
    • • home care organizations
    • • outpatient diagnostic centers
    • • rehabilitation facilities
    • • residential hospices
    • • nonresidential substitution-based treatment centers for opiate addiction

How do you get a CON? 

Obtaining a CON requires strict compliance with THSD regulations. It requires careful completion of an application with THSD. You will also need to pay an application fee, file a detailed letter of intent with THSD and publish that letter for public comment. In many cases, it is helpful to file supporting documentation as well.

What does THSD consider when deciding whether to issue a CON?

THSD is required to consider many factors in determining whether the proposed facility meets a healthcare need in the area, including:

    • • the need for the facility in the particular area
    • • the economic feasibility of the project
    • • the contribution which the project will make to the development of the healthcare system

Do I need an attorney in order to obtain a CON?

There is no legal requirement that you be represented by counsel. Bear in mind, however, that the process is time-consuming and complicated and that THDS requires strict compliance with its rules. An experienced attorney can help you navigate this process and, if your application is denied, can assist with an appeal.