State eyes licensing of freestanding facilities

Health care systems such as UCHealth, Banner Health and Centura Health will face different state licensing regulations if legislation passes the legislature this year.

Senate Bill 19-110, for the licensing of ambulatory surgical centers, calls for the regulation of freestanding and office-based facilities performing outpatient medical procedures, such as liposuction and radiation treatments, outside of a hospital setting. Under current law, these facilities are not regulated to the same extent as facilities within a hospital and, in some cases, not at all. The bill, if approved, would take effect in January 2020.

A second bill, House Bill 19-1010, creates a new license for freestanding emergency departments that the Department of Public Health and Environment can begin issuing in July 2022. The license would be for health facilities that offer emergency care services and that are owned, operated by or affiliated with a hospital or hospital system but in a separate building. This excludes community clinics licensed before July 2010 that serve rural communities and ski areas and facilities seeking community clinic licensure for the state’s underserved populations.

“It really just provides the state with the appropriate regulatory authority to license and oversee freestanding emergency departments,” said Katherine Mulready, senior vice president and chief strategy officer for the Colorado Hospital Association, which is lobbying for the bill. “We’ve seen rapid growth of them along the Front Range. The market moved to respond to consumer demand, and the state regulatory authority needs to catch up.”

Freestanding emergency departments developed as a new business model less than 10 years ago in metro areas in Denver and along the Front Range, but there wasn’t a licensure category that specifically fit that model, Mulready said. As of fall 2018, there were 53 freestanding emergency departments in the state, according to numbers provided by the CHA.

The emergency departments originally were placed with community clinics that have emergency centers, a category established in the 1970s to address part-time and seasonal centers in rural communities, she said.

“This tailors licensure requirements to a specific model of care that’s lumped in with other community clinics,” Mulready said. “We felt it was important to have them carved out separately.”

Margo Karsten, chief executive officer of Banner Health in Northern Colorado and Western Region president, is supportive of HB19-1010.

“It allows that quality of care is provided at any freestanding emergency department or emergency room,” Karsten said, adding that since 2012, Banner Health has operated the Banner North Colorado Emergency Care in Greeley. “It reassures the public the same standard of care is given.”

Tim Cashman, chief financial officer for Estes Park Health, finds that freestanding emergency departments are not feasible for rural areas such as Estes Park given the area’s demographics, adding that the local hospital already offers competitive prices. Such facilities cut into “hospitals’ abilities to keep their doors open,” he said.

“If companies set up comparable shops for freestanding emergency rooms and freestanding radiology and laboratory services, hospitals need those services to survive, so they can provide for other higher acuity patients,” Cashman said.

Another regulatory piece of legislation that restricts health care facilities is the certificate of need program, active in 35 states and something Colorado implemented in 1973 and repealed in 1987. Certificate of need programs originated to regulate the number of beds in hospitals and nursing homes and to prevent excessive equipment purchases, service line expansions and facility creations, acquisitions and expansions with the aim to keep costs in check while meeting demand.

“We are not seeing CON activity in Colorado,” Mulready said, adding that the Colorado Hospital Association doesn’t have a position on CONs.

Arguments in favor of CON programs say they help ensure capital spending meets community needs, while arguments against find the programs restrict investments in quality of care and limit marketplace competition, resulting in higher care costs, Mulready said.

“CON is not a proven model to help control health care costs. It’s an option to try, but there is not any evidence backing it up that it works,” Mulready said.

HB19-1010 is related to the concept of certificates of need, said Dean Sanpei, senior vice president of strategy for Centura Health in Centennial. Centura operates Longmont United Hospital in Longmont and Avista in Louisville, among others in Denver and elsewhere in Colorado.

“From my perspective, there are some starting efforts in that direction, like (HB19-1010),” Sanpei said. “In the future, if that separate license is layered on with different requirements, emergency rooms will have to meet other requirements. Whenever you license a facility, there are certain requirements you have to meet. If the requirements change, quality changes, too.”

The premise behind CONs is that costs will increase if too many facilities are built, especially emergency rooms, Sanpei said. The challenge is determining community need for new facilities, based on things like population, demographics, wait times and quality of care, he said.

“If the process is not structured, is not comprehensive and detailed enough, it can create problems. … It can become a very political process,” Sanpei said. “The intent can be there, but the actual application can be a problem. … The devil’s in the details how community need is defined and who gets to define it.”

Cashman, who is not in favor of CONs, finds that hospitals and health facilities engage in due diligence when they develop projects, ensuring there is a market for them, and don’t need the regulation.

“What you see is a decrease in quality and in patient outcomes,” Cashman said. “They have difficulty with their scores, and patients have a hard time getting into hospitals because they’re so limited. It becomes an access issue for patients. … It’s an overly burdensome regulation that’s not necessary.”

At Banner Health, leaders are looking at ways to reduce costs internally in staffing levels, innovation and provision of care.

“We’re really encouraging the right care at the right place at the right time,” Karsten said. “Wellness visits do really well in Banner Health. We also have great access to same-day appointments.”

Banner Health facilities added the appointments in the last two years, plus encourages visits to urgent care facilities instead of the emergency department. Banner built an urgent care facility in Fort Collins in April 2018 to add to its facilities in Loveland and Greeley, Karsten said. Banner Health also accepts Medicaid patients, unlike other systems in the area, with the aim to keep patients out of the emergency department in favor of seeing a primary care physician, she said.

“From a state perspective, I would love to see all health systems take Medicaid patients and reduce emergency department visits and keep vulnerable patients healthy,” Karsten said, adding that having a primary care physician results in better health. “We’re always going to look at ways to be effective and efficient at the same time.”

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