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Washington State Hospital Association Sues State Over New Certificate of Need Policy

The Washington State Hospital Association has asked Thurston County Superior Court to invalidate changes the state recently made to certificate of need rules.

The WSHA lawsuit claims the new regulations don't have a basis in certificate of need law, according to a news release. Historically, the state Department of Health has reviewed the sale, purchase or lease of a hospital before awarding a certificate of need; the state has previously said it doesn't have the authority to review other management changes such as affiliations and mergers, according to the release.

However, last year, Washington Gov. Jay Inslee (D) directed the Department of Health to update the certificate of need process for hospital mergers and affiliations. Eleven civil rights and healthcare advocacy groups had called on the governor to enact a six-month moratorium of hospital mergers in the state due to concerns that a recent surge of hospital transactions in the state would reduce access to care.

"Considering the importance of healthcare reform, CON reforms are necessary because some affiliations, corporate restructuring, mergers and other arrangements result in outcomes similar to the traditional methods of sales, purchasing and leasing of hospitals," Gov. Inslee wrote in a letter to Kathleen Taylor, executive director of the American Civil Liberties Union of Washington. "The CON process should be applied based on the effect of these transactions on the accessibility of health services, cost containment and quality."

On Jan. 23, the department altered the rules so that it will now review any "change of control" in "any part" of a hospital. The WSHA claims the rule change means even small business decisions such as outsourcing billing services will have to go through "an extensive and expensive review." Each application requires a $40,000 filing fee and takes months or years to complete, making the process "unmanageable for hospitals," according to the release.

According to the hospital association, the Department of Health went beyond its authority in changing the certificate of need law, and it was "arbitrary and capricious" of the state to change the application and interpretation of the law.

More Articles on Hospital Transaction Policies:
Catholic-Secular Hospital Mergers Cause a Stir in Washington State
When the FTC Looks Back: Implications of Retrospective Reviews of Hospital Mergers  
Washington Gov. Jay Inslee Orders Updates to Hospital Merger Process 

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