Certificate of need regulations a barrier for some small businesses



(The Center Square) – If Caitlan Hainley wanted to open a small business in Des Moines, she would obtain a business license, tax identification number, and, in rare cases, the zoning board if the property needs rezoning.

But Hainley wants to open a birthing center for expectant mothers. That means she must apply for a certificate of need, also known as a CON, from the state of Iowa. The process can take over a year. And if even one hospital objects, she faces the possibility of never opening.

Hainley and her business partner, Emily Zambrano-Andrews, have not filed for a certificate of need because they have seen others struggle to fight the regulation. Iowa law allows Hainley and Zambrano-Andrews to help mothers give birth in hotels, vacation rentals and private homes. But they can’t open their birthing center because of the state’s CON laws.

“It’s just kind of ridiculous that the state says, ‘we have to regulate this because you would have a center with equipment on site,'” Hainley told The Center Square. “But if it’s a place where you are bringing your own equipment, the same exact equipment, all of a sudden that’s perfectly safe and ‘we don’t have to regulate it.'”

That leaves Hainley and Zambrano-Andrews in limbo. They filed a lawsuit earlier this year challenging the CON law.

“Anytime you want to file a new institutional health service, you have to file a long and complicated application and there’s an application fee, which is three-tenths of 1% of the anticipated cost of the project so it’s not a small fee,” said Wilson Freeman, of the Pacific Legal Foundation, who represents Hainley and Zambrano-Andrews.

Once the application is submitted, the state department will notify all competitors in the area.

“As a matter of course, the local hospitals will come in and oppose the application, they will say that there is no need for this business, in spite of the fact that my clients are already engaged in the home birth business,” Freeman said.

The State Health Facilities Council, which approves CONs, has not met since January due to a lack of a quorum. Two new members were appointed last week, Diane McCool, communications specialist for the Iowa Department of Inspections, Appeals and Licensing that oversees the state’s CON process, told The Center Square. The council meets on Nov. 17, she said.

Gov. Kim Reynolds appoints seats to the Health Facilities Council. In January, Reynolds issued an executive order requiring a review of the state’s boards. The State Health Facilities Council is one of 111 boards to be cut if lawmakers approve. It is now known what will happen with the CON process. A message to Reynolds’ office from The Center Square was not returned.

A bill that would eliminate birthing centers and mental health facilities from the CON process passed the Senate earlier this year. The bill was referred to the House Health and Human Services Committee but did not make it to the House floor, according to the bill.



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