An Update on Alabama’s Certificate of Need Program

Over the past few months, we have seen some changes and movement when it comes to the certificate of need (“CON”) program in the State of Alabama.

In February, Emily Marsal was appointed as the new Executive Director of the State Health Planning and Development Agency (“SHPDA”), the state agency overseeing the CON program. Emily comes to SHPDA after serving with the Alabama Department of Senior Services.

In addition, we have seen movement towards revising the State Health Plan (“SHP”). The State Health Coordinating Council (“SHCC”) is the regulatory body consisting of both providers and consumers that oversees the SHP. The SHP is used to help determine the need for certain services within the state based on a variety of factors, including data collected by SHPDA. To be approved, a CON application must be consistent with the SHP. Thus, if the SHP does not show a need for a particular service, a CON application for that service cannot be granted. If the SHP shows a need for a particular service, a CON application for that service must be consistent with the need shown in the SHP.

The SHCC is currently in the process of updating several sections of the SHP. For some services (e.g., SCALF beds), once revised, it is anticipated that the SHP will show a need where it has not shown a need in the past, opening the door for CON applications for such services to be filed. For other services (e.g., in-home hospice), it is anticipated that we may see a new, more detailed need methodology where one has not historically been present.

Thus, physicians and other providers who are interested in venturing outside the traditional physician office into other lines of business should pay attention to the proposed revisions to the SHP and the resulting changes in the need methodology for certain services. For those areas opening the door for CON applications to be filed, we expect that a number of applicants will move quickly in attempts to meet such need. Once a CON application is granted by SHPDA to meet the need reflected in the SHP, the need is no longer present in the SHP and future CON applications cannot be approved, absent a regulatory procedure to adjust the need or amend the SHP. Thus, we suspect that, in certain areas for certain services, time will be of the essence once the revised SHP is implemented.

Additional information on the SHCC meetings the SHP revisions is available on the SHPDA website at http://shpda.state.al.us/.

Kelli Fleming is a partner at Burr & Forman LLP practicing in the firm’s Health Care Industry Group. Burr & Forman LLP is an official partner with the Medical Association.