The Washington State Hospital Association is responding to a new oversight rule from the Department of Health the way organizations often respond these days: with a lawsuit.
The Health Department in November introduced new rules that require hospitals to file Certificate of Need applications in the event of any change in control through a merger, affiliation or sale to another organization. The sometimes-arduous Certificate of Need process was already a requirement when hospitals went through a sale, purchase or lease, and the hospital association wants to go back to that standard.
The association filed a petition in Thurston County Superior Court asking that the court invalidate the new Certificate of Need rules, saying they are not supported by the existing statute.
“State agencies can’t redefine what the law means after 20 years of interpreting the law the same way,” said association president and CEO Scott Bond in a news release Thursday. “We know the new rules go too far because the Department of Health has consistently said the law doesn’t apply to mergers or affiliations. Reversing that position now is arbitrary and is beyond the authority granted to the Department by the Certificate of Need law.”
The Department of Health issued the new rule along with requirements for hospitals to spell out their policies on reproductive care, end-of-life care, admissions and nondiscrimination in part because of the nationwide trend toward hospital consolidation, particularly through religious-based organizations whose values might dictate more limited medical offerings. The new rules are an effort to ensure transparency, so the public knows exactly what services may change when a new owner comes into town.
Locally, Yakima Regional Medical and Cardiac Center is currently going through the Certificate of Need process because its parent company, Naples, Fla.-based Health Management Associates, is being sold to Tennessee-based Community Health Systems.
Across town, Yakima Valley Memorial Hospital is looking into some kind of affiliation with a larger Seattle-based medical organization, and if a partnership emerges, the hospital would likely have to seek a Certificate of Need as well under the new rules, which went into effect Jan. 23.
Requiring a Certificate of Need for so many different types of ownership arrangements is onerous and inefficient, the hospital association says.
“The Certificate of Need program is essentially a permitting process. Add the fact that each application requires a $40,000 filing fee and typically takes months or years to complete, and the process becomes unmanageable for hospitals,” the news release said.
That’s time and money that could be better spent on improving patient services, hospitals say.
When the rules first went into effect last month, local hospital leaders lamented that they added to an already-exhausting list of oversight requirements for hospitals, but said they would still comply and the requirements were still doable.