Lawmakers Again Weigh Value Of Certificates Of Need For Hospitals

West Virginia has required new health care providers to obtain state-issued certificates of need since 1977. These documents verify that a new facility offers services necessary to the local community before opening.

But as this year’s legislative session nears, lawmakers are reconsidering the certificate’s place in West Virginia’s future — part of a years-long push to reform a process some consider harmful to competition among health care businesses.

During an interim committee meeting of the West Virginia Legislature’s Joint Standing Committee on Health Tuesday, health care professionals and administrators spoke to state lawmakers about the certificate of need process and the state’s health care landscape.

As of December 2024, 36 states and the District of Columbia had laws in place requiring health care facilities obtain certificates of need, according to the National Academy for State Health Policy.

Justyn Cox, executive director of the West Virginia Health Care Authority (WVHCA), testified about the program’s history and present-day operations. Since 1983, his organization has administered the certificate of need program, which he said is his organization’s primary source of self-funding.

Certificates of need applications require facilities to project their patient population three to five years into operation, and establish back-up plans for funding if they are unable to sustain “adequate demand,” Cox said. Applications are reviewed twice a month, and the WVHCA processed or began processing 35 new applications in 2024.

“They do have to prove to us the sustainability of the project,” Cox told the committee members.

The West Virginia Legislature has also created some exemptions to the certificate of need process for some facilities expanding or acquiring new medical equipment, according to the WVHCA website.

David Goldberg is vice chairman of the West Virginia Hospital Association and CEO of Mon Health, a medical system based in north central West Virginia. He told committee members Tuesday that certificates of need mark “opportunities to keep balance” in the state’s health resources.

Deregulating health resources could incentivize patients to cross state lines for services not accessed within their community, he said.

“West Virginia is smack surrounded by other certificate of need states,” Goldberg said. To “not have the focus that we do as West Virginians taking care of our own people… [would] make a detrimental impact.”

Skip Gjolberg, CEO of WVU Medicine St. Joseph’s Hospital in Buckhannon, said the elimination of a certification process could also exacerbate health workforce issues.

Without regulation limiting the amount of providers in a region, local health care markets can be more volatile and result in closures or layoffs at facilities facing market saturation, Gjolberg said.

“I don’t know what the connection is between opening up more facilities and that these white coats and nurses are going to magically appear, because they’re not,” he said. “We constantly struggle with staffing.”

But other speakers argued the certification process favors health care providers by reducing their competition, resulting in higher costs for customers. That included Matthew Mitchell, a senior research fellow at West Virginia University’s Knee Regulatory Research Center and a scholar at the Mercatus Center, a free-market think tank at George Mason University.

“If there are fewer providers, then that gives an advantage to the providers,” he said. “When there are more than one or two or three providers in an area, then the payers end up being able to pay a little bit lower.”

Pennsylvania’s certificate of need law lapsed in 1996, and was not reimplemented thereafter. Mitchell said research shows that reimbursement costs for coronary artery bypass surgeries subsequently fell by 9%.

“Medicare reimbursements are 5 to 10% lower in non-certificate of need states,” he added.

Mitchell also said that competition among health care facilities could result in a higher quality of care, because residents would have multiple different options for care.

Jaimie Cavanaugh, a legal policy counselor for the Pacific Legal Foundation, said several other states are already considering certificate of need law reforms or repeals. Pacific Legal is a public interest group that fights for “limited government, property rights and  individual rights,” according to its website.

Cavanaugh said that restricting the number of health care facilities reduces locations for new health care workers to be trained, and could create long-term capacity issues for states “with an aging population” like West Virginia.

“In my view, it’s a classic case of bureaucracy paying more attention to numbers on a piece of paper than to reality,” she said.

Last year, the House Health and Human Resources Committee recommended the passage of House Bill 4909, which would have eliminated certificate of need requirements for all health facilities in the state except for hospice centers. However, the bill was not advanced by the full West Virginia House of Delegates.

This year’s legislative session begins Feb. 12, and West Virginia lawmakers will have the opportunity to set forth legislation addressing, reforming or even repealing certificate of need laws.