Florida follows in the footsteps of states such as New Hampshire and Wisconsin by paring back its Certificate of Need (CON) program for specialty hospitals, effective July 1, 2021. Florida first introduced its CON program in 1968. A CON was previously required for any new, converted, expanded, or otherwise significantly modified healthcare facility, including hospitals, skilled nursing facilities, hospices, or intermediate care facilities for the developmentally disabled. In June 2019, Florida Governor Ron DeSantis signed House Bill 21 into law, eliminating portions of Florida’s CON program for hospitals. The Bill phased out the CON requirements for hospital providers in two phases.
Which Hospitals Are No Longer Subject to CON as of July 1, 2021?
As of July 1, 2019, general hospitals (including acute care facilities, long-term care facilities, and rural hospitals) and providers of tertiary services (including but not limited to open-heart surgery, organ transplantation, and comprehensive rehabilitation) are no longer subject to the CON requirement.
Effective July 1, 2021, the following specialty hospitals will likewise be exempt from the CON review:
- Class II hospitals, including children’s and women’s hospitals;
- Class III hospitals, including specialty medical, rehabilitation, and psychiatric and substance abuse hospitals; and
- Class IV hospitals, which are specialty hospitals restricted to offering Intensive Residential Treatment Facility Services for Children.
Which Provider Types Remain Subject to CON?
While House Bill 21 repeals portions of Florida’s CON program for hospitals, the following healthcare providers still remain subject to CON oversight and approval:
- Nursing homes;
- Hospices; and
- Intermediate care facilities for the developmentally disabled.
What Is the Impact on Providers?
Existing providers may not welcome the competition of additional providers. However, phasing out Florida’s CON program for Class II, Class III, or Class IV hospital providers is welcome news for new providers looking to enter the specialty hospital space. Exempting general and specialty hospitals from the CON requirement removes a barrier to entry and creates new opportunities for providers, who previously were limited to acquiring existing facilities in certain geographic areas through a change of ownership (CHOW). New hospital providers may now build new facilities or expand their services in any geographic area of Florida. In addition, existing hospital providers may engage in construction and renovation, or expand their existing service offerings and bed counts without obtaining a need determination and additional regulatory oversight. Initial licensure and Medicare and Medicaid enrollment will still be required, and CHOWs will still need to be approved.
For more information, please contact Hedy S. Rubinger or Charmaine A. Mech.
The Arnall Golden Gregory Change of Ownership (CHOW) team leads all regulatory aspects of healthcare transactions for investors, operators, managers, capital partners, and developers of every size in all 50 states. The team streamlines the regulatory process so that clients close their transactions on or ahead of schedule. Whether obtaining licensure and Medicare/Medicaid approvals, structuring transactions to expedite closings, anticipating issues to minimize cash flow disruption, negotiating regulatory terms in deal documents, creatively resolving diligence issues, or advising on CHOW guidelines and compliance, the team provides extensive experience and practical solutions. To date, the CHOW team has served as primary regulatory counsel in transactions valued at more than $25 billion.