Becoming a Hospice: The Certificate Of Need Process

The certificate of need process creates costs for non-profit hospices already operating in an area, leading them to spend more money on marketing to be competitive. [Photo: Jon M. Fletcher]

As corporations from around the nation try to break into the Florida hospice market, Florida's certificate of need process is the battleground that determines who gets in and who doesn't. The process

is expensive and costly for both the for-profits and for existing non-profits that must respond to the competition. But for the terminally ill and their families, Florida's system, the country's first, offers some assurance that they'll choose only among providers — for-profit or non-profit — that can deliver quality care.

The recent bid for a new hospice in Jacksonville is typical. The state's CON process for hospices is similar to the one it uses in deciding whether to allow a new hospital or nursing home. On an ongoing basis, state health officials analyze demographics and health statistics within a region, including the projected number of deaths from diseases such as cancer, market economics and hospice-use patterns and trends. If they determine the need for more hospice services, they open applications to providers who want to compete in that region. Ultimately, they select the firm or organization they consider sufficiently capitalized, with local support and a record of providing quality care.

In 2009, the state determined a need for an additional hospice in northeast Florida, long served by non-profit Community Hospice of Northeast Florida. Five for-profit firms paid about $16,000 each in fees to apply: Vitas Healthcare, Odyssey Healthcare of Dallas, Compassionate Hospice Care of New Jersey, Seasons Palliative Care of Illinois and United Hospice of Georgia. Community Hospice decided not to compete. In part, leadership disagreed with regulators about the need for a new hospice and didn't want to incur the costs involved in applying.

Last year, the state approved Vitas' application and denied the other four. Vitas had bolstered its application with more than 50 letters of support. Vitas also promised to make $300,000 in donations to health programs at Jacksonville's Florida State College, for example; another $500,000 to United Way of Northeast Florida; and $50,000 to the Jacksonville Urban League.

An appeal by United Hospice took about a year to resolve. Ultimately, the state affirmed its choice of Vitas, which began operating in Jacksonville in May. From beginning to end, the process took nearly two years and cost Vitas well over $1 million.

The CON process and increased competition also create costs for the existing non-profits, which must evolve to stay competitive. Community Hospice CEO and President Susan Ponder-Stansel, who started with the organization as a social work volunteer 25 years ago, says she'll use the money her organization would have spent on the CON application to pump up marketing and cover other expenses that come with competition. For example, non-profit hospices now employ representatives to explain what services the hospices offer to local doctors and hospitals, a position unheard of a decade ago.

Whatever costs it imposes, Jeff Gregg, bureau chief of health facility regulations for Florida's Agency for Health Care Administration, says the CON process ultimately has two main benefits.

It helps ensures quality of care by keeping out low-quality operators, whether non-profit or for-profit. In addition, he says, it results in choice for patients and families in selecting a hospice that best fits their needs, while eliminating the need to comparison-shop among numerous alternatives at an emotionally difficult time.

Tags: Healthcare