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28 Pa. Code § 401.6. Certificate of need—statement of policy.

§ 401.6. Certificate of need—statement of policy.

 (a)  Statewide goals.

   (1)  Sufficient ambulatory surgery capacity shall be available and accessible in this Commonwealth to meet local community needs.

   (2)  Ambulatory surgery shall be promoted throughout this Commonwealth whenever it represents a cost effective alternative to inpatient surgery.

   (3)  Until 50% of total surgical procedures in an HSA region—or whatever alternative percentage is consistent with local health systems plans adopted by the Health Systems Agency and approved by the Statewide Health Coordinating Council are performed on an ambulatory basis, as indicated hereafter, no application for CDN approval of an ambulatory surgical facility or service shall be considered by the Department as in appropriately increasing total community health care costs, provided the project represents the least costly and most effective method of providing services and meets the guidelines set forth in this section.

 (b)  Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise:

   (1) Ambulatory surgical facility—A facility not located upon the premises of a hospital which provides outpatient surgical treatment. The term does not include individual or group practice offices or private physicians or dentists, unless the offices have a distinct part used solely for outpatient surgical treatment on a regular and organized basis. See §  401.2 (relating to definitions).

   (2) Ambulatory surgical service—The provision of outpatient surgical treatment in a health care facility.

   (3) Independent ambulatory surgical facility—An ambulatory surgical facility whose majority or controlling interest is not owned or controlled by a hospital, group of hospitals or by corporations owning or controlling hospitals. A hospital or a corporation owning or controlling a hospital desiring to establish an ambulatory surgical facility well outside its current service area shall be considered an independent ambulatory surgical facility for review purposes in the new service area.

   (4) Outpatient surgical treatment—Surgical treatment to patients who do not require hospitalization, but who require constant medical supervision following the surgical procedure performed. See §  401.2.

 (c)  Community need—general.

   (1)  The need for an increase in ambulatory surgical services exists if less than 50% of total surgical procedures in an HSA region or whatever alternative percentage is consistent with local health systems plans are performed on an ambulatory basis. The volume of surgical procedures performed in a physician’s office—that is, not a health care facility—shall be excluded.

   (2)  Additional capacity for ambulatory surgery is needed if each HSA and the Department determine that existing providers of surgery in subregional markets are not making a good faith effort to perform 50% of total surgeries, or whatever alternative percentage is consistent with local health systems plans, on an ambulatory basis.

   (3)  Once the 50% ambulatory surgical target is met, no additional ambulatory surgery proposals will be considered needed except those which:

     (i)   Are generated by a facility at full capacity and with a need to expand in order to meet demand.

     (ii)   Seek to serve underserved populations.

     (iii)   Are necessary to provide new technology/procedures.

   (4)  The review of individual ambulatory surgical projects will be based upon a comparative analysis. Comparative analysis of competing proposals will be based upon the criteria for review of CON applications as set forth in the act and this title.

   (5)  In the interest of fair competition, equal consideration will be given to the following:

     (i)   Hospitals with no current excess capacity, that is, current operating rooms are utilized for both inpatient and outpatient surgery more than 80% of the time based upon 8 hours per day, 5 days per week.

     (ii)   Hospitals with excess capacity, but willing to reduce capacity by closing at least one existing operating room for every new ambulatory surgical operating room approved. The closure shall be considered a part of the CON application, and an increase in operating rooms after the implementation of the project shall be considered a change in the scope of the project, and is, therefore subject to CON review.

     (iii)   Independent freestanding ambulatory surgical facilities.

   (6)  Hospitals with current excess operating room capacity unwilling to commit to a reduction in inpatient operating rooms will be reviewed on their own merits, but will be given lesser priority than those proposals listed in this section.

   (7)  Optional preferences—the Department will give additional priority to applications meeting one or more of subparagraphs (i)—(iv). Subparagraphs (i) and (ii) will be used to establish priorities among hospital sponsored or related projects only. The terms shall be considered a part of the CON application and a change shall be considered reviewable.

     (i)   A proposal which reduces current inpatient operating room capacity by a greater amount than the number of new surgical operating rooms requested.

     (ii)   A proposal which, in addition to reducing operating rooms, reduces setup and staffed inpatient acute care beds.

     (iii)   A proposal in which an applicant is willing to guarantee its charges by procedure for at least a 2-year period following initial operation of the approved project. In order to qualify for this preference, the applicant shall include within its application, evidence of binding contractual relationships with major third-party payors guaranteeing charges for the required 2-year period.

     (iv)   A proposal in which the applicant agrees not to change ownership any sooner than 2 years after the project becomes operational. The ability and expertise of an owner is a critical factor in the issuance of a CON for the development of an ambulatory surgical facility. Thus, all applicants given preference under this subparagraph should be advised that changes in ownership would be considered a substantial change and therefore may be subject to CON review.

 (d)  Economic and financial feasibility.

   (1)  Proposals to increase ambulatory surgical capacity shall be financially feasible, considering the anticipated volume of care, the reasonableness of service changes and the availability of appropriate financing.

   (2)  Careful consideration should be given to each project’s allocation of costs between a parent corporation and a proposed ambulatory surgical facility to ensure that there is no hidden or unfair subsidization by the parent corporation to make the project appear less costly than it may actually be.

 (e)  Quality of care. Each ambulatory surgery project shall meet the licensure requirements of this title.

 (f)  Access to care. Each ambulatory surgery project shall demonstrate in its application a commitment to serve a fair share of medically underserved patients in its community.

 (g)  Project review. Projects for ambulatory surgical services and facilities shall be reviewed on a batching basis. The effective date for implementation of batching will be the date on which the Department publishes a notice of proposed rulemaking in the Pennsylvania Bulletin on batching.

 (h)  Research and data. The Department and the HSAs will collect current information on ambulatory surgical utilization and costs. The Department will require each applicant to report on a timely basis to the Department and the HSAs information on utilization and charges that the Department determines necessary to assure the provisions of this section are implemented.


   The provisions of this §  401.6 adopted March 22, 1985, effective March 23, 1985, 15 Pa.B. 1079.

Notes of Decisions

   Economic and Financial Feasibility

   The Department need not apply a regional approach when considering an application for a Certificate of Need to operate a freestanding ambulatory surgery center nor must the Department compare the applicant’s charges to more than other service provider. Jeannettee District Memorial Hospital v. Department of Health, 595 A.2d 677 (Pa. Cmwlth. 1991).

   The CON Memorandum 85-15, published in 15 Pa.B. 1079, March 23, 1985, and now found in this section, was an interim interpretive policy dealing with the State Health Plan, within the Department’s expertise and was therefore beyond the scope of the Regulatory Review Act. Grandview Surgical Center, Inc. v. Holy Spirit Hospital of the Sisters of Christian Charity, 533 A.2d 796 (Pa. Cmwlth. 1987).

   It was improper for the Board to emphasize statistics of one health care provider as opposed to a regional approach in analyzing investment and utilization patterns. Grandview Surgical Center, Inc. v. Holy Spirit Hospital of the Sisters of Christian Charity, 533 A.2d 796 (Pa. Cmwlth. 1987).

   ‘‘Cost-effectiveness’’ is an appropriate factor for the Board to consider in a decision. Grandview Surgical Center, Inc. v. Holy Spirit Hospital of the Sisters of Christian Charity, 533 A.2d 796 (Pa. Cmwlth. 1987); appeal denied 546 A.2d 623 (Pa. 1988).

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