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03.10.2022 Legal News

Opportunity Knocks As North Carolina Anticipates First Look at New Health Care Plan and Entertains Petitions

On March 2, the State Health Coordinating Council officially kicked off a new year of planning for development of new health care facilities, services, and equipment for North Carolina. A range of Petitions were filed seeking changes to the State Medical Facilities Plan (SMFP). While the planning process is at its earliest point, it is not too soon to consider where the opportunities may arise for providers looking to expand operations in North Carolina in the coming year.

Positron Emission Tomography (PET) Scanners – Statewide ’23 Needs?

The 2022 SMFP numbers suggest the possibility that every Service Area in North Carolina could announce a PET scanner Need Determination in the upcoming ’23 SMFP. An atypical need methodology in the SMFP is written to trigger a Need Determination in any Health Service Area where even a single provider reports 80% utilization per-scanner in its last reporting year (regardless of volumes on any existing or newly approved scanners). 

Last year, several providers reported numbers approaching or exceeding the 2,400-procedure level that gives rise to a Need Determination. 

  • Asheville/Hickory (HSA I) – One Western North Carolina hospital posted over 2,400 procedures in the 2022 SMFP and will likely show volumes triggering a Need Determination for a new PET scanner for Western North Carolina;
  • Winston-Salem/Greensboro (HSA II) – A Piedmont-Area hospital was just three scans short of achieving 80% utilization in the 2022 SMFP and could tip the scales this year to generate a Need Determination for a new PET scanner for the Piedmont Triad;
  • Charlotte (HSA III) – One hospital hosting two scanners exceeded 70% utilization per-scanner in the 2022 SMFP, indicating the potential for a Need Determination for a new PET scanner for the Mecklenburg County area;
  • Raleigh/Durham (HSA IV) – A Triangle provider exceeded 77% utilization per-scanner on two scanners per the 2022 SMFP and could post utilization triggering a Need Determination for a new PET scanner in the Triangle;
  • Wilmington/Fayetteville (HSA V) – In the 2022 SMFP, one area provider exceeded 93% but the area did not show a Need Determination because of a newly issued CON; this year, if that provider’s experience holds, a new PET Need Determination is nearly certain to appear in the New Hanover/Cumberland area;
  • Greenville (HSA VI) – In the 2022 SMFP, one provider reached 88%, but a Need Determination did not appear due to a prior Need; again, utilization at this provider of 80%+ will trigger a Need Determination for a new PET scanner in Eastern North Carolina.

Psychiatric & Chemical Dependency Offerings: A New Paradigm

The 2022 SMFP reflects the decision to eliminate the Need Determination Methodologies for Psychiatric Inpatient Services and for Chemical Dependency Treatment Beds. Entities may apply for CON approvals without regard to Need Determinations, and Petitions will not be required.

As a result of this major change, providers are free to apply in 2022 to develop additional psychiatric and chemical dependency treatment capabilities in any County in North Carolina. Regulatory Performance Standards for psychiatric and chemical dependency beds were repealed as of January 1, 2022.   

In January 2022, a provider proposed development of an 84-bed Regional Hospital for Geriatric Psychiatry at a cost of $24.6 million. The changes from the 2022 SMFP are likely to carry over into the 2023 planning year, opening the door for providers to propose new psychiatric and chemical dependency treatment facilities anywhere in the State.

End-Stage Renal Disease – A New Policy Proposal

The Planning year began with a proposal by a leading nursing home operator seeking an avenue to bring dialysis capabilities onto the campuses of nursing homes in North Carolina. Specifically, the proposal, if adopted, would allow nursing homes to apply for a CON to develop dialysis stations at nursing homes without regard to county or facility Need Determinations. 

In support of the proposal, the petitioner emphasized the benefits of eliminating travel for nursing home residents needing dialysis, the rarity of county Need Determinations, and limited access to dialysis if the policy were not approved. The petition drew comparisons to the CON laws of other states, specifically looking at Illinois as a model supporting nursing home-based dialysis. 

Magnetic Resonance Imaging (MRI) Scanners – Workgroup & Petition Activity

An ongoing MRI Methodology Workgroup includes several imaging providers, hospital representatives, a physician group member and equipment company leaders. The group is co-chaired by Drs. Greene and Jordan and includes CON and Healthcare Planning participants.

The Workgroup convened meetings in the latter part of last year and in January and February of 2022. At its most recent session, the group delved into tiering of hospitals, a model excluding population growth, potential effects on mobile services, preferred models, model parameters and the population threshold to obtain a first fixed scanner. 

At the initial State Health Coordinating Council (the "SHCC”) meeting in March 2022, a hospital representative shared concerns over the ability of providers to meaningfully track and participate with the Workgroup as well as questions about the directions taken by the Workgroup to date. 

Two petitions were submitted related to MRI policies. One hospital petitioner proposed to revise Policy TE-3 to delete the “main campus” reference and add language that would limit the applicability of the policy to acute care hospitals with inpatient and outpatient surgical services on the “same campus.” The petitioner claims the current language of the policy has the unintended consequence of not including community hospitals operating under the license of a larger facility.  

Another provider again petitioned for the creation of a new policy TE-4 which would allow a provider with a highly utilized vendor-owned mobile MRI to seek a CON to obtain its own mobile MRI.

Other Petition Activity: Assisted Living / Acute Care & Neonatal Beds / Cardiac Cath

Adult Care Homes Bed Methodology – An adult care home (ACH) consultant petitioned for an adjustment to the Need Determination methodology for ACH beds (commonly referred to as assisted living beds). The petition posits that the COVID-19 pandemic caused a substantial decline in ACH bed utilization and the data used for Need Determinations in the 2022 SMFP was only temporarily low because of the pandemic. The petition proposes a change to the methodology that would reduce the impact of a temporary swing in utilization by either utilizing an alternative methodology to address temporary decreases in utilization or permanently changing the methodology to focus on population growth of seniors rather than bed utilization. 

Acute Care Bed Methodology – A health system petitioned for an adjustment to the acute care bed need methodology. The proposal would remove neonatal beds from the need methodology, both in number of neonatal beds and neonatal days of care. The proposal would remove the specific Need Determination for neonatal beds while still requiring a CON for development of these beds. 

Acute Care Bed Capacity – A provider petitioned for removal of Policy AC-5, which relates to replacement of acute care beds. The petition argues that the policy has become mostly irrelevant due to the “main campus exemption” in statute and now applies only to providers who are replacing beds not located on a main campus. Because of this, the petitioner believes the occupancy rates required by the policy and as applied to certain hospitals are inconsistent with the legislature’s decision to exempt “main campus” replacements from CON review. 

Cardiac Cath Need Methodology – A provider petitioned for a change to the need methodology for cardiac catheterization (cardiac cath) equipment. The petition argues that service areas with only one unit of cardiac cath equipment must show higher utilization to trigger a need than service areas with more than one unit. 

The Future is Now: Operating Rooms / Cardiac Cath / LINAC

Each year, Operating Room (OR) Need Determinations are a closely watched feature of the SMFP. In 2022, an August 15, 2022 opportunity exists for CON Applications proposing to develop one or two ORs in Wake County. 

Those interested in new cardiac cath equipment in Mecklenburg County need not await the upcoming SMFP. An immediate opportunity exists for providers to file an August 15, 2022 CON Application proposing to acquire cardiac equipment to be located either in a hospital or in a licensed ambulatory surgical facility.

Linear Accelerator (LINAC) Need Determinations also appear in the 2022 SMFP, giving providers immediate opportunities to propose new equipment in Service Area 7 (Anson/Mecklenburg/Union) on August 15, 2022 or in Carteret County in Service Area 24 on April 18, 2022.

With a range of developments on various fronts, health care planning promises an eventful 2022 and a potentially exciting 2023 year to follow. 

For more information, please contact Joy Heath at 919.981.4001 or, or Joel Johnson at 919.981.4082 or