Erik Bodin

Director, Office of Licensure and Certification

Virginia Department of Health

9960 Maryland Drive, Suite 401

Henrico, VA  23233

                RE: Public Comment for Periodic Review of 12 VAC 5-220

Dear Mr. Bodin,

Thank you for the opportunity to comment on the Virginia Board of Health periodic review and small business impact review of 12 VAC 5-220, Virginia Medical Care Facilities Certificate of Public Need Rules and Regulations.  I write as President and Chief Executive Officer of Chesapeake Regional Healthcare.  I believe that Certificate of Public Need (COPN) regulations continue to have ongoing benefit to communities like Chesapeake who have invested significant money and effort into building a non-profit hospital system.

Chesapeake Regional Healthcare (CRH) is a unique entity.  Following the 1963 consolidation of the former independent city of South Norfolk with Norfolk County, the citizens and physicians of the newly formed City of Chesapeake began to recognize the need for their own hospital.  In 1966, the Virginia General Assembly agreed and codified into state statute the creation of the Chesapeake Hospital Authority, our governing body.  Today, over 40 years later, Chesapeake Regional Healthcare includes a 310 bed hospital and affiliated acute and long term care services serving residents of the City of Chesapeake and adjacent areas.  We employ over 2,100 people and have an annual total economic impact of nearly $1 billion.

COPN is a vital component of state health care policy that helps hospitals and other providers balance their mission to provide high quality, affordable health care to all patients regardless of their ability to pay and meet other community and social needs.  Last year CRH ranked 1st in South Hampton Roads and 4th out of 22 Eastern Region hospitals in Charity Care (as a percentage of total expenses) while at the same time contributing to more than 45 community organizations with various causes.  Without COPN, many providers would not be required to provide charity care.  By tying project approval to charity care, the state is assured that there are providers within all geographic areas that will treat indigent and uninsured patients.

Healthcare is not a free market.  Hospitals are subject to a number of unique regulatory requirements and market inequities not borne by other providers.  For example:

• EMTALA – hospitals must treat all patients regardless of their ability to pay 24/7/365

• Hospitals have a higher payer mix of Medicare and Medicaid patients typically paying less than 80 cents on the dollar of costs

COPN helps address these inequities.  COPN regulations also preserve quality of services offered by specialized staff.  Absent some check on whether a service is needed in a community, the available skilled workforce is often not able to meet the staffing needs of competing providers, driving up the costs of services to bring in and train new staff and, to the extent skilled staff are not available, diluting the quality of care.  As currently recognized in the companion State Medical Facilities Plan regulations, some procedures also have volume thresholds so that staff can maintain proficiency and provide better care.

Please understand that Chesapeake Regional Healthcare’s interest in preserving the current COPN law is not based on limiting “competition” and “protecting a monopoly.”  COPN does not prevent competition; it is a safeguard against healthcare over-expansion.  The current review process applies rules equally across the board.  Rather than repealing or amending the existing regulations, the Department of Health’s focus in implementing the existing COPN law should be on the process improvements outlined in Secretary Hazel’s COPN Workgroup Report dated November 25, 2015.  Many of those changes would increase transparency and improve the efficiency of COPN reviews.  Until there is a legislative statement to the contrary, the projects subject to COPN review should continue as is.  The goal of any COPN reform should be to improve public health and welfare and to prevent the financial ruin of independent systems like Chesapeake Regional Healthcare.

Thank you again for this opportunity to comment.

Sincerely,

Reese Jackson, President & CEO

Chesapeake Regional Healthcare