TN AG Clarifies Certificate of Need Law for Free Standing Emergency Rooms

Press release from Stites & Harbison PLLC; November 3, 2014:

The Tennessee Attorney General has issued a formal opinion concluding a certificate of need (C.O.N.) is required in order for a hospital to establish a free standing emergency department (FSED) not located on its hospital campus. 14 Tenn. Att’y. Gen. Op. No. 14-95 (October 27, 2014). The Attorney General’s conclusion affirmed the position of the legal counsel and staff of the Tennessee Health Services and Development Agency (HSDA), the state agency with jurisdiction and authority over the state’s C.O.N. program.

A FSED is a facility that is operated 24 hours a day, 7 days a week for the diagnosis, treatment, stabilization and possible transfer of patients in need of emergent care. It does not include any inpatient hospital beds. It is operated under the license of an existing hospital, normally located within a 35 mile radius of the FSED. Freestanding Emergency Departments have gained popularity in recent years as a less costly and more accessible treatment alternative to full service acute care hospitals in some settings.

The Tennessee Health Services and Planning Act provides that a certificate of need is required for the establishment of a “health care institution.” The law defines a “health care institution” as one of twelve listed types of health care facilities. The list in the statute includes “hospital” but does not include “emergency department” or similar nomenclature.

The Attorney General recites the HSDA’s position that because of the diverse and acute nature of services provided in an emergency department, there is no basis to conclude that the establishment of a FSED is anything other than the establishment of a “hospital,” for which a C.O.N. is required. The Attorney General opines the state agency’s position is “a reasonable interpretation of the applicable law.” The Attorney General Opinion does not represent a change in policy under the Tennessee certificate of need program, but brings more certainty to an issue that had been questioned by some hospitals in recent years.