Thinking of Expanding? Don’t get CONned.

October 3, 2018

Many states, in an attempt to contain healthcare costs, require that a Certificate of Need (CON) be obtained prior to building a healthcare facility. These types of facilities include hospitals, nursing homes, adult care facilities, ambulatory surgery centers, diagnostic centers, and treatment centers.

A CON is typically required for a healthcare facility to:

  • Establish a new health care facility
  • Construct a new space
  • Renovate existing spaces
  • Acquire, either through purchase or lease, major medical equipment
  • Add new services
  • Remove existing services

This list is not all-inclusive and will vary from state to state.

The process for obtaining a CON can be quite arduous. It involves submitting an extensive application, which includes showing that the CON applicant is of good character, with no prior violations, and has competence, meaning they have experience or is engaging those with experience to ensure the success of the project. The application also asks why there is a public need for the facility, if the project is financially feasible, and for applicants to analyze the impact the proposed project will have on its intended geographic region. During the review process, the state commission will evaluate the cost-effectiveness of the proposed project to the cost-effectiveness of services provided by existing facilities.

The economic piece of the CON application requires financial forecasts and analyses, which will play a significant part in the review process. Having advisors on your side who can assist with developing the financial model and effectively tell the story behind the numbers will make the difference in a successful CON submission.

For questions about this or other matters, please contact Larry Rubin or one of our tax advisors at 301.231.6200.