Minnesota considers tighter restrictions on surgery centers

Physicians in Minnesota with designs on developing a freestanding surgery or imaging center may face tighter regulatory demands in the future, if a bill introduced in the state's Legislature is passed.

Legislation proposed in February seeks to modify requirements for outpatient surgical and imaging centers. They include adding a licensing requirement, through which the Minnesota Dept. of Health would weigh a facility's application to ensure it was in the public's interest.

The Minnesota Medical Assn. sent an alert to its members urging them to voice their displeasure with the bill, which has support in both the state House of Representatives and Senate.

The association charges the bill not only calls for a certificate-of-need procedure, but it singles out freestanding facilities -- which typically have physician investors -- as the only ones that would undergo such a review process with the state health commissioner.

"You can call it anything you want, but it sure looks like certificate of need, and it sure looks like you're trying to control the market," said Paul Matson, MD, president of the Minnesota Medical Assn. and an orthopedic surgeon from Mankato.

The Minnesota Hospital Assn., a chief supporter of the bill, disagreed with the characterization, saying it's only meant to ensure a facility would not affect a region's access to necessary care.

"This is not trying to limit the supply," said Bruce Rueben, president of the hospital association. "This is a pause in the process, for the community to make sure these don't impact access to critical services.

"This simply addresses the potential conflict of interest," he said. "When you have the same group delivering service, owning a facility, and referring a patient, there can be an economic incentive to refer patients to your facility."

Through the review process, the bill could ensure freestanding facilities would accept low-income patients as well as ones with favorable insurance, proponents said.

The bill also calls for more regulation and certification procedures to be put in place, which Rueben said would "level the playing field" between hospitals and freestanding facilities.

Dr. Matson said the MMA agreed with certification changes that would be introduced and had no argument with the idea of freestanding facilities accepting "all comers."

However, the medical association alert called the bill anticompetitive and said it does not recognize the root of the problem, which is inadequate reimbursement for inpatient care. Independent facilities can actually save the health care system money, Dr. Matson said.

"Most would agree if you regulate the market to a specific group of players, it tends to stifle innovation," he said. "Most people would say competition is a good thing."

Minnesota is one of 14 states without certificate-of-need laws, though it still has ways to regulate health care spending and is looking to add teeth to that process.

In 2002, an oncology group in the Minneapolis-St. Paul area sought to purchase a PET scanner, but had to undergo a prospective review because a previous capital expenditure did not receive a favorable retrospective review from the state's Dept. of Health.

Because the PET scanner would have been a joint project between the oncologists and a separate radiology practice, the department commissioner required the deal to be approved first by the U.S. Office of the Inspector General. The groups did not pursue the joint project after that ruling.

Usually, hundreds of bills to alter local certificate-of-need laws are introduced in state legislatures each year, although most of the proposals do not pass, said Richard Cauchi, program director of the National Conference of State Legislatures' health care program. Last year was typical, he said; 13 states enacted laws that modified certificate-of-need laws, though the changes were not substantial.