Case Study

Seeking Regulatory Reprieve from Wasteful Healthcare Expansion

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A woman holds six $100 bills with their ends set on fire. Photo by Jp Valery on Unsplash.

The Challenge: To protect our client against ill-conceived development likely to create an oversupply of ED services and endanger a $350 million investment that had been carefully calibrated to meet the community’s demonstrated need.

The Background: In a market of roughly 200,000 residents, our client – a 200-bed regional hospital – had secured CON approval for a new hospital campus and a freestanding emergency department. But before the client could break ground, a competing health system applied for another FSED facility barely 1,000 feet away in the same fast-growing commercial corridor. Based on our extensive knowledge of CON requirements, Ascendient was retained to provide expert testimony in an administrative challenge to the second FSED.

Our Work: When the competing applicant refused to grant an extended review, Ascendient had barely a month to prepare for a high-stakes regulatory hearing. Adding to the pressure was an elevated legal standard. While most regulatory challenges are based on a “preponderance of evidence,” the standard in this case was “clear and convincing” evidence to convince the hearing officer to set aside the state’s presumption of need.

Based on our deep experience with FSED planning, feasibility, and litigation across multiple states, we quickly assembled a team to pull scores of documents and thousands of pages of relevant data. Analysts curated and presented the data while our Litigation lead, Daniel Carter, worked almost daily with the client’s attorney and in-house team to craft a strategy and an argument based on the data.

“You really need that integrated approach,” Daniel says. “The attorney has legal knowledge. The client has clinical, operational, and local market knowledge. We bring the knowledge of healthcare planning and finance – it’s our national experience applied to the local situation.”

Our Findings: In a state where CON applications are approved based on a non-substantive review that presumes the need for additional services, our task was to show why that presumption was wrong in this particular case. Based on our data gathering and analysis, we argued that the market was oversupplied for ED services:

  • Despite 1.7% population growth for the county between 2015 and 2022, ED visits had actually declined by 0.3%. The opposing party showed that its ED utilization had grown from 2019 to 2023, but we argued that countywide numbers were a better indicator of need – or lack thereof.  
  • Faced with rising demand, the opposing system said its ED was over capacity by about 2700 patients a year, but we presented data showing that other EDs in the market had excess capacity of roughly 5400 patients.
  • With multiple EDs already approved for development, we showed that countywide capacity would increase by 44% (roughly 35,000 visits) once all projects were complete. In other words, the new capacity coming online would more than meet any increased need projected by the competing applicant, which is (or should be) an essential component of any CON review.
  • Finally, we presented national data showing that the average driving time for emergency services was 17.3 minutes. Within that perimeter, we showed that nearly 115,000 residents could choose from 11 existing facilities, plus two more already approved for development.

The Outcome: In less than a week’s time, the hearing officer issued a 21-page Final Order overturning the presumption of need and denying the request to build a second, competing FSED. In accordance with our research, the order pointed out the majority of patients seen at the proposed facility would not require emergency-level care – in fact, of the 5,700 annual visits forecast by the applicant, the hearing officer concluded that fewer than 1,000 would be appropriate for on-site ED treatment.

With that, our client was cleared to build a freestanding ED that would meet the needs of the county for years to come – without the risk that a competing facility across the street would dilute utilization for all EDs, putting our client’s financial feasibility for their approved projects at risk.

We viewed this not only as a victory for our client but also for the Certificate of Need process in general. The whole point of the CON process is to ensure that healthcare organizations deploy their resources to meet documented needs in the community – not solely to pursue competitive advantage or financial gain.

Instead of spending $14 million to duplicate emergency services directly across the street, the competing applicant in this case is now free to reinvest that money in other services or other parts of the county where the need is greater.

Ascendient experts can provide expert testimony for health systems seeking to rationalize service distribution and block unneeded expansion. Contact us to learn more.

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