The effects of implementation problems on certificate of need decisions in Illinois

Abstract

There has been a lack of appreciation of the complexities of implementing certificate of need (CON) programs and, further, the effects of those implementation problems on the program's effectiveness. This study describes implementation problems and presents some evidence of their impact on approval rates in one state. Start-up phase problems included non-reviewable projects, exempted projects and pre-emptive actions by the hospitals to avoid the regulations. It is estimated that these problems raised the program's approval rate by 12 percent and resulted in approximately $310 million of capital costs and an unknown increase in operating costs. Two problems of continuing implementation are identified. The first concerns the availability and specification of the standards and criteria for project review. The second problem is the lack of significant compliance mechanisms. The Reagan administration has made massive cuts in support for health planning and CON programs. The rationale for these cuts is based on the belief that CON has not been effective in reducing the escalation of hospital costs. This article indicates some of the reasons for its impotence.