INDIANAPOLIS – State lawmakers might try to limit hospital construction under a bill before the Indiana legislature.
“It's been a hospital arms race,” Sen. John Ruckelshaus, R-Indianapolis, said of a recent building boom.
And he is worried about hospitals clustering new construction in high-wealth areas – ultimately driving up the cost of health care for Hoosiers.
Senate Bill 573 would require projects of more than $10 million obtain a Certificate of Need from the Indiana State Department of Health.
New projects now go through health and safety checks to be certified as a hospital but don't need a certificate of need.
At least two major Fort Wayne projects are in the works that could be affected.
Brian Tabor, president of the Indiana Hospital Association, said more than 30 states have a certificate process but the trend is moving away from that. He noted Wisconsin has dropped its requirement and New Hampshire repealed its law.
Indiana used to have a Certificate of Need when federal regulations required it. But Indiana repealed it in the early 1990s.
The hospital association opposes the bill.
“What I've learned – both anecdotally and in research – is a certificate of need in hospital markets does not control or reduce costs,” Tabor said. “What is does is create an environment where projects end up being litigated, drawn out and you enter into a realm of very subjective decision-making.”
He said Ruckelshaus' bill would affect not just new facilities but also repairs and remodeling costing $10 million or more.
Tabor said Indiana has between 120 and 130 acute care community hospitals. But the overall licensed number is 180 facilities statewide because it also includes long-term acute care or rehabilitation hospitals, psychiatric facilities and others.
He said many of the construction projects around the state are replacement facilities, such as an expansion/renovation project at Cameron Memorial Community Hospital in Angola. Lutheran Health Network also plans a $120 million replacement for St. Joseph Hospital in Fort Wayne.
Both of those are in rural or high need areas, Tabor said, and aren't the specialized hospitals Ruckelshaus is worried is siphoning all the private pay customers.
“Cost is incredibly important, and I understand why people are concerned but this is not the answer,” he said.
Ruckelshaus said constituents came to him with concerns of a new project in a higher-income area of Indianapolis. Building there and trying to draw the private pay makes it harder for other hospitals who get most of the low-income patients.
That is why lawmakers a few years ago put a moratorium on new nursing homes.
Ruckelshaus argued hospitals aren't truly part of the free market system because much of the money that flows through is from the government – either through Medicare or Medicaid covering seniors, the poor and people with disabilities.
But Tabor said the two situations are different because of how they are financed by government programs.
He said hospitals are paid for procedures and are not reimbursed for new building costs. But costs of increased capacity are built into nursing homes' government reimbursement.
“Competition and market forces are at work with hospitals,” he said. “It's service based. The dollars follow the patient.”
Ruckelshaus also filed a companion bill that would study the topic in the summer should it become too controversial. Both are co-authored by Sen. Ed Charbonneau, R-Valparaiso. He chairs the Senate Health Committee and controls what legislation gets heard.
Ruckelshaus said the general plan will be a hearing and then a decision on what approach is the best.