Opinion | Could Alabama’s certificate of need process be in jeopardy?

Back in late July, Solara Surgical Partners, a relatively small Oklahoma-based company that specializes in ambulatory surgical centers (ASCs), announced that it had formed a partnership with Orlando Health, one of the nation’s largest healthcare companies worth more than $10 billion, and that the new joint venture would focus on the creation of more ASCs.

Orlando Health owned two ASCs in Jefferson County at the time of the partnership. Solara, on the other hand, managed ASCs in other states but didn’t own or operate anything in the state of Alabama.

I know what you’re thinking—that’s nice and all, but why are we talking about these two companies and their joint venture?

Because a little over a month ago, Solara, which didn’t own an ASC in Alabama until its partnership with Orlando Health, was named as the new operator for a large health care project in Hoover, named the Riverwalk Village Health and Wellness Center. I’ve written about this project a couple of times—particularly about the very odd manner in which its application for a certificate of need was approved and the even odder lease that the city entered into with the developer of the project.

In the paperwork submitted by the Hoover Health Care Authority to the Alabama State Health Planning and Development Agency (SHPDA) as part of its certificate of need (CON) process, Solara’s qualifications for operating that Riverwalk Village project included mention of two ASCs in Alabama that the company operates.

They are the ASCs that Solara inherited as part of its joint venture with Orlando Health. Inherited in July. Less than three months before, it was identified as the operator of the Riverwalk Village project.

That’s important because … well, it’s important because this process has been screwed up from the very start, and this is one of the best illustrations of the consequences of that screwed up process.

It has raised eyebrows, rightfully, across the Alabama health care world, and it has left the state’s CON process—a process already under fire from major healthcare players—vulnerable to attack.

Because once again, like we’ve seen with the Alabama Medical Cannabis Commission, we have an Alabama regulatory board apparently not following Alabama rules and regulations when making decisions.

It started with the CON review board granting what amounted to a conditional CON for the Riverwalk Village project, despite the fact the project lacked an operator. Instead, the Hoover Health Care Authority (HHCA) was the applicant and was allowed to name the operator at a later date, using a process called “project modification.”

To put that in more relatable terms, it’s a bit like approving a car coming off the assembly line despite the fact that it doesn’t have an engine.

It was a decision that baffled experts in the field.

“In the CON process, there are some very basic things that the board is looking for to judge the viability of a project,” said attorney Richard Brockman, a veteran health care attorney with more than 40 years of experience in the field. “One thing is, is there a need for a project. Another is does it demonstrate financial feasibility. Another is making certain it won’t adversely affect other healthcare providers in the area.

“It is incredibly difficult, if not impossible, to judge most of those things if the operator is unknown.”

It also makes it nearly impossible for any other healthcare providers to know if they should oppose the project.

Take this case specifically. If the operator is Solara Surgical, a smaller company with a reputation for managing ASCs and staying in its well-identified lane, the opposition from local providers in the Hoover area would probably be minimal. But if that operator was known to have an ASC-related partnership with Orlando Health, which has a presence already in the Birmingham/Hoover area and a history of the usual skirmishes that companies go through to poach and counter-poach doctors and staff, then maybe that’s not the case. Maybe a larger healthcare provider, such as UAB, decides that it doesn’t want an Orlando Health-run, major ASC project in its backyard.

Mind you, this is not to paint Orlando Health as the bad guy here. Neither it nor Solara Surgical has done a thing wrong or even slightly shady. Riverwalk Village needed an operator ,and they were willing to take it on.

Nor is it really about the actions of HHCA or Riverwalk Village. They didn’t circumvent the process or trick anyone. They very publicly asked the Board for permission.

This is about the process. About the law. And more specifically, about SHPDA failing to follow it.

SHPDA executive director Emily Marsal has downplayed the significance of the Board’s decision to grant the CON to Riverwalk, and she also rightly notes that it came after the approval was recommended by an administrative law judge following a lengthy hearing. Marsal said other projects have been granted conditional CONs, requiring them to meet certain conditions before the CON became vested, but none of those conditional applicants ever, in the 40-year history of CON laws, received a certificate without naming an operator.

And for good reason.

The law says certain things about a healthcare project have to be laid on the table up front so everyone can see, and the board can judge whether the project is necessary, viable, and beneficial to the community, and so interested parties (i.e. nearby health care providers) can raise objections. There is no question that naming the entity that plans to run the project is a vital component of that decision.

But in Riverwalk Village’s case, the SHPDA board, on the recommendation of an administrative law judge, granted conditional approval of the certificate of need without knowing the operator. It could not answer whether the operator had the means or expertise to successfully operate the facility, thus putting patients in the Hoover area at risk of shoddy care, bad outcomes, and higher costs. (Again, not because Solara is a substandard operator, but because no one knew who the operator would be.)

It also removed the ability of local providers to challenge the project. Because who were they challenging? In fact, the Hoover Health Care Authority told the board that that was a goal—to limit opposition to the project. That was a benefit, it said, to not naming an operator.

Literally every other company that has applied for a CON would agree with that.

But, again, it’s not the way the law works, nor should it.

In this case specifically, a lot of local providers would have liked to know the players in the game. Because that’s what the CON process is for.

And that CON process is incredibly crucial to Alabama’s healthcare system—particularly when it comes to ensuring that consumers receive quality care for a decent price and that taxpayer dollars are well spent.

“When it is operated properly, the CON process protects consumers and communities from high prices and poor providers,” said attorney Jack Mooresmith, who wrote Alabama’s CON regulations in the early 1980s. “It has been very important to keeping costs low, particularly in the area of elder care, by ensuring that quality providers were not squeezed out of the market by large companies that then raise prices and offer substandard care.”

On the other side of that argument, though, are the free market proponents who argue that the market will work it all out in the end and set the price and standards. In recent years, the CON process has come under near constant scrutiny from them and corporate entities applying pressure on Alabama lawmakers to remove that crucial check on the system.

But the people most intimately involved in healthcare in Alabama refute the free market arguments, and they point to unregulated states where the quality of services are lacking and failure rates are through the roof.

“A consumer buying health care is not the same as a consumer buying a loaf of bread,” Brockman said. “There are a number of factors that have to be considered—factors that the average consumer never entertains until that person requires care of some sort. Not least of which is the fact that the majority of our care is paid for by taxpayer dollars through Medicare and Medicaid, and there should be some regulation in place to assure that our tax dollars are being spent on the greatest quality of care and that quality care is available to the majority of citizens.”

No area of health care in Alabama is more positively affected by the CON process than elder care. Brandon Farmer, president of the Alabama Nursing Home Association, said the CON process has allowed Alabama to continue offering affordable, quality care to its elderly population through nursing homes, including maintaining at least one operational nursing home in all 67 counties—even counties in which there is no hospital or practicing pediatrician.

“The Alabama Nursing Home Association (ANHA) remains a strong proponent of sound, data-driven state health-planning,” Farmer said. “A large portion of Alabama’s population live in rural areas, including the elderly.  The Certificate of Need process provides a structure designed to ensure all citizens of the state have access to quality healthcare, driven by need and current availability. Without CON guidance, the rural health concerns facing our state would only be exacerbated, creating multiple ‘healthcare deserts.’

“Nursing homes are a vital component of rural health care and critical to our state’s most frail and elderly population. Erosion of the state health planning process would only jeopardize the delivery of care to all Alabamians and create a serious problem with access to care in rural areas.”