North Carolina Certificate of Need (CON) Program

North Carolina Certificate of Need (CON) Introduction

Like many other states, North Carolina has an extensive CON process in place for healthcare services and facilities. Winning approval for a CON application is often a time consuming and difficult undertaking. RPC provides clients with a team of consultants with experience working on CON projects.

When working on a CON project, RPC can prepare the entire CON application or sections of the application as the client prefers. When the client is defining the project and deciding whether to apply, RPC can help assess the market and regulatory situation to determine the relative likelihood of success for a project. RPC not only completes a thorough review of the competitive environment, market need and financial analysis, but also works seamlessly with the client’s staff, architects, engineers, and other outside consultants to create a solid CON application.

RPC is led by Ron Luke, JD, PhD, who has prepared CON applications and presented testimony in CON hearings since 1981 in over 20 states.  RPC’s work on CON projects includes the opening of new acute care hospitals, hospices, physical rehabilitation and psychiatric specialty hospitals, ambulatory surgery centers and nursing homes, the relocation and addition of beds, and acquiring major medical equipment. Working with RPC during the CON process gives the applicant the advantage of a skilled, experienced team that can provide expert advice and produce an effective CON application.

Contents last updated on August 2024

North Carolina 2025 Draft State Medical Facilities Plan

The North Carolina State Health Coordinating Council (SHCC) has published its draft 2025 State Medical Facilities Plan (SMFP) and all summer petitions and comments have been received.

SMFP Process

The SMFP is a guiding document for healthcare planning in North Carolina and provides projections of need for CON-reviewable facilities and healthcare services. It summarizes supply and utilization for each facility and service, describes projection methods and policies, and provides other data relevant to need projections. Health care providers and facilities in North Carolina can only gain approval for additional assets that are published as needed in the SMFP.

The development of the SMFP is a continuous process that includes several opportunities for public comment. Two of these opportunities include a spring and summer petition period. The spring petition period is intended for requests regarding the SMFP that have potential for statewide effect, including requests for addition, deletion or revision of policies of methodology for determining need. The summer petition period is after the Agency has considered the spring petitions and published a Proposed SMFP in early July. Summer petitions involve requests for adjustments to the need determinations in the Proposed SMFP.  Members of the public can also submit general comments about need determinations during the summer petition period. Both spring and summer petitions/comments are published on the Agency website and given a two-week public comment period for others to respond to individual petitions. Each petition is assigned to its appropriate SHCC committee.

Services with a Published Need in the Draft 2025 SMFP

The table below summarizes the needs published in the Draft 2025 SMFP. As the table shows, there is a published need for acute care beds in nine service areas, five of which have a need for over 100 beds. There is also a need for operating rooms, several categories of major medical equipment, and adult care homes.

SMFP Asset	Service Area	Number Available
Acute Care Beds	Alamance County	46
	Buncombe/Graham/Madison/Yancey	129
	Cabarrus County	126
	Durham/Caswell/Warren	82
	Mecklenburg County	211
	Pender County	43
	Union County	136
	Vance/Warren	30
	Wake County	267
Operating Rooms	Davidson County	2
	Mecklenburg County	5
	Pitt/Greene/Hyde/Tyrell	5
Adult Care Home Beds	Ashe County (HSA I)	80
	Perquimans (HSA VI)	100
	Person (HSA IV)	140
Fixed Cardiac Cath Equipment	Haywood County	1
	Henderson County	1
	Johnston County	1
Fixed MRI Scanner	Alamance County	1
	Catawba County	1
	Durham/Caswell/Warren	1
	Forsyth County	1
	Guilford County	1
	Mecklenburg County	1
	Moore County	1
	Nash County	1
	New Hanover County	1
	Onslow County	1
	Union County	1
	Wake County	1
	Wayne County	1
	Wilkes County	1
Fixed PET Scanner	HSA I	1
	HSA II	1
	HSA IV	1

Summer Petitions and Comments Submitted

In total, seven petitions and two comments were submitted during the summer petition period. Below are brief summaries of each petition, organized under their applicable SHCC committee. Each summary includes a link to the petition, as well as a link to submitted comments, if applicable.

Acute Care Services Committee

Petitions

DLP Maria Parham Medical Center submitted a petition for the removal of 30 acute care beds from need determination in Vance/Warren counties. Their petition argues there is a special geographic issue in Vance County that has caused an excess of beds, inaccuracy in the growth rate multiplier and unnecessary duplication of resources. The petition argues access is not currently an issue in the service area and bringing another health system into the rural, economically fragile service area would jeopardize the existing hospital campuses. Two letters were submitted in support of their petition. No formal opposition was received.

Pender Memorial Hospital d/b/a Novant Health Pender Medical Center submitted a petition to remove the need for 43 acute care beds in Pender County. The petition states there was an error in the Hospital Industry Data Institute (HIDI) acute care days which caused an error in the resulting bed need projections. In Table 5A of the Proposed 2025 SMFP, non-acute care bed days were included in NH Pender’s HIDI data. The petition states that, once the error is corrected, there is no projected acute care bed need in Pender County. No letters of support or formal opposition were received for this petition.

Comments

AdventHealth Asheville submitted a comment in support of the need determination for 129 additional acute care beds in the Buncombe/Graham/Madison/Yancey service area that was published in the Draft SMFP. In Spring 2024, Agency staff developed and presented an alternative model for need determinations to the Acute Care Committee. This alternative model uses the most recent five years of facilities’ acute days of care in the growth rate multiplier, instead of using fiscal years 2015-2019 (pre-COVID pandemic years). AdventHealth Asheville argues the projected population growth and aging demographics of the service area support the need for 129 additional acute care beds which were calculated using the alternative model. No letters of support or formal opposition were received for this petition.

Cone Health submitted a comment in support of the need determination for 46 acute care bed need determination in Alamance County. The comments support the Agency’s alternative model for need determinations presented to the Acute Care Services Committee in Spring 2024. Cone Health argues tremendous growth in the Triad and the Triangle area has driven population growth in Alamance County, including net migration of individuals and families. No letters of support or formal opposition were received for this petition.

Long-Term and Behavioral Health Committee

Petitions

Gibson Care Corporation d/b/a Home Instead submitted a petition to create an adjusted need determination for a licensed home health agency in Iredell and/or Alexander County in the 2025 SMFP. The petition argues that aging seniors want to remain in their home due to long term care costs. The petition argues that another home health agency is needed to provide an affordable option for seniors while also decreasing hospital admissions/readmissions, improving medication management and administration, as well as control of pressure injuries. Two letters of support were submitted for this petition. Iredell Health System and Association for Home and Hospice Care of North Carolina submitted comments in opposition of this petition.

Heart’n Soul Hospice of the Carolinas submitted a petition for an additional home health care agency in Mecklenburg County. The petition argues there is an unfair advantage for existing providers to expand into a new county because they are able to do so without demonstration of need in the new service area. The petition also argues the need methodology should be updated to capture these expanded hospice licenses to accurately capture need. The petition provides data that show low penetration rates, underserved communities of color and high population growth. Forty-one letters of support were submitted for this project. Well Care Health, Association for Home and Hospice Care of North Carolina/North Carolina Healthcare Association, Carolina Caring and VIA Health Partners submitted comments in opposition of this petition. During the public hearing period, members of the SHCC committee requested additional data from Heart’n Soul  Hospice, as well as VIA Health Partners. This data has been published on the Agency’s website.

Technology and Equipment Committee

Petitions

Mission Hospital submitted a petition to convert HSA I’s general PET need determination to a specific need determination for one fixed cardiac PET scanner. The petition argues that, although heart disease is the leading cause of death in HSA I, it is the only HSA in North Carolina without a cardiac PET program. The petition argues that advances in PET cardiac imaging would be helpful in managing the health of cardiac patients. Mission Health also argues there is significant capacity and lack of significant future demand for oncology PET services in HSA I. Three letters of support were submitted for this petition. Margaret R. Pardee Memorial Hospital and Novant Health submitted comments in opposition of this petition.

Wayne Memorial Hospital, Inc., d/b/a UNC Health Wayne submitted a petition to create a special need adjustment for one additional linear accelerator in Wayne County for a provider of cancer care that does not currently have a linear accelerator. The petition argues that the aging population, racial makeup and high cancer incidence rate support the need for an additional linear accelerator. The petition notes that the only provider for radiation therapy in Wayne County is for-profit and is not a North Carolina-based healthcare system and the only radiation oncologist in the county is nearing retirement. The petition argues that these factors lead to a level of uncertainty about the long-term stability of current radiation therapy services in Wayne County. The petition discusses an internal analysis which shows there is a need for linear accelerator services for UNC Health Wayne patients. The specificity of the request of the petition is supported through references to two SHCC precedents. The first reference was the 2022 WakeMed petition for a special need determination for one additional linear accelerator in Service Area 20, which the SHCC approved. The second reference was the 2021 Carteret Health Care petition for adjusted need determination for one linear accelerator for a single county, which the SHCC approved. The petition also states that the Agency has also acknowledged this need through the creation of its Policy TE-4 in Spring 2024. No letters of support or formal opposition were received for this petition.

Catawba Valley Medical Center submitted a petition for an adjusted need determination for one additional unit of hospital-based fixed cardiac catheterization equipment in Catawba County. The petition argues that utilization statistics show the existing equipment at the facility is at capacity, but the need methodology did not produce need in the county because of equipment and usage at Frye Regional. The petition states that sending cardiologists and patients to Frye Regional is logistically challenging and puts unnecessary health and potential financial strain on their patients. Their petition refers to a SHCC precedent when UNC Rex was permitted a special need for one additional unit of fixed cardiac catheterization equipment in Wake County in 2016. No letters of support or formal opposition were received for this petition.

Looking Forward

After the public comments period, the Agency prepares a recommendation on whether to approve, deny or alter the need determination adjustment request. Agency reports are discussed at the next SHCC committee meetings where committee members vote to approve, deny or alter the Agency’s recommendations. The committees forward their recommendations to the SHCC. At their final meeting, the SHCC considers all information provided and completes their final recommendation of the 2025 SMFP. The recommended final 2025 SMFP is presented to the Governor who may approve it as recommended or make any adjustments or amendments they deem appropriate. The deadline for final Governor approval is December 31, 2024.

State Agencies

North Carolina Division of Health Service Regulation (DHSR)
DHSR administers the CON program through its Certificate of Need Section. DHSR’s CON Section is also the party that reviews CON applications and issues the department decision on CON applications. Appeals of the initial decision are to the Office of Administrative Hearings. An Administrative Law Judge (ALJ) will hear the CON case and make a decision on the case.

NC Division of Health Service Regulation
2704 Mail Service Center
Raleigh, NC 27699-2704
(919) 855-3873

North Carolina Court of Appeals Judge
An adversely affected party may request judicial review of the ALJ’s CON decision to the North Carolina Court of Appeals, where the case is heard by a three-judge panel. Further appeal is the North Carolina Supreme Court.

Facilities and Services that Require CON

North Carolina’s Certificate of Need program requires certain health care service providers to gain state approval through the CON application process before they are able to offer or expand certain services. North Carolina’s CON law is based on the idea that health care cost increases may be controlled by governmental restrictions on unnecessary or duplicative medical facilities.  The following services and facilities require CON approval:

• Acute care hospitals
• Inpatient rehabilitation hospitals
• Nursing homes
• Kidney disease treatment centers
• Intermediate care facilities for individuals with intellectual disabilities (ICF-IID)
• Home health agency offices
• Diagnostic centers where the total equipment costs exceed $3 million
• Hospice programs (both community hospices and inpatient hospice facilities)
• Operating rooms and ambulatory surgery facilities
• Adult care homes
• Long-term care hospitals and beds
• Capital expenditures for new institutional health services in excess of $4 million
• Change in bed capacity
• Relocation of beds, operating rooms, or dialysis stations
• Project cost overrun in excess of 15% of CON-approved capital expenditure amount
• Transplant services
• Burn services
• NICU
• Open heart surgery
• Cardiac catheterization
• Acquisition, lease or transfer of major medical equipment (cardiac catheterization, gamma knife, heart-lung bypass machine, linear accelerator, MRI, lithotriptor, PET, simulator, air ambulance and any other medical equipment over $3 million, including associated costs)
• Addition or relocation of gastrointestinal endoscopy suites
• The purchase, lease or acquisition of any health service facility
• Upgrading or expanding an existing health service or facility

North Carolina passed the Access to Healthcare Options law during its 2023 legislative session. This law expanded Medicaid eligibility and included several changes to what services require CON review. Some of these have taken effect, and others will begin in 2025 and 2026. See RPC’s blog post about the changes here. 

Certificate of Need Process Milestones

1. Annual Publication of State Medical Facilities Plan
   At the beginning of the calendar year DHSR publishes the State Medical Facilities Plan (SMFP) which contains the maximum number of health facility beds, operating rooms, and units of medical equipment, by category, which can be approved by the CON section. Consistency with the state health plan is required. The SMFP also contains the batching cycle dates for the year. Batching cycles allow the CON section to review all competing applications for the same service at the same time. The most recent SMFP is available here:
2. Application Submission
   The CON agency reviews CON applications according to a batched review cycle outlined in the SMFP. Applications and accompanying fees must be received by 5:00 p.m. on the 15th day of the month preceding the beginning of the review period. An application may not be amended after it is submitted. If an application is deemed incomplete, the CON Section will notify the applicant within five (5) days. An application is incomplete if an inadequate fee is paid, the wrong application form was used, or only one copy of the application is provided. The correct fee and application and copy must be received by the last business day before the review begins for the review to proceed.
3. Public Comment Period
   During the first 30 days of the review period, any person may file written comments concerning the applications under review.
4. Public Hearing
   Although a hearing is not required for all reviews, it is required for competitive reviews, any proposal over $5,000,000 and can also be requested by any affected parties or the CON Agency. The public hearing will take place no more than 20 days after the conclusion of the comment period.
5. CON Section Application Review
   The CON section has from 90 to 150 days to review an application. All written comments and public hearings are taken into consideration during the decision making process. At the end of the review period, CON staff issue a decision and publish their findings, which explain the basis for the decision. Decisions and findings can be found here.
6. Decision Appeals
   If an interested party wants to appeal the CON Section’s decision, they must file a petition for a contested case hearing with the Office of Administrative Hearings within 30 days of the date of the decision. The administrative law judge will make his/her decision within 270 days of the petition’s filing.
7. Appealing Final Decision
   If a party wishes to appeal the final decision, they must file an appeal with the North Carolina Court of Appeals.
8. Monitoring
   After a CON has been issued, the CON Section will monitor the development of the project through required progress reports. The CON Section may withdraw a CON if the holder does not develop and operate services consistent with their CON application.
9. Enforcement
   The Agency may withdraw a certificate of need if the certificate holder does not develop the project in a timely manner and cannot show that it is making an effort to develop the project. The Agency may also withdraw a certificate of need if the certificate holder does not develop the project in a manner consistent with the representations made in the application.

 What criteria are used to review a CON?

North Carolina’s General Statutes §131E-183 lists the following review criteria for CON matters

1. Consistency with State Medical Facilities Plan and need determination and policies published therein
2. Demonstrated need for the population to be served by the applicant with particular regard to low income persons, racial minorities, women, handicapped persons, the elderly, and other underserved groups
3. For a reduction or elimination of service—proof that the population presently served will be adequately served after the reduction
4. Demonstration that the proposed service/facility is the least costly or most effective method of service
5. Availability of funds for capital and operating needs. Demonstration of the immediate and long-term financial feasibility of the project
6. Project will not result in unnecessary duplication of health services
7. Availability of manpower and management personnel for the project
8. Demonstration of coordination of necessary ancillary and support services, as well as coordination with existing health care system
9. Any applicant proposing to provide a large portion of its services to individuals outside of the health service area must demonstrate the special need for this
10. Applicant must show that special needs of health maintenance organizations (HMOs) are met, when applicable
11. Any proposed construction must demonstrate that cost, design and construction methods are the most reasonable alternative and will not unduly increase cost of providing health services, and that energy saving methods have been included in the design
12. Services address the health needs of the medically underserved including the elderly, Medicaid and Medicare recipients, women, handicapped and minority patients
13. Health services accommodate health professional training programs in the area
14. Project has a positive impact on competition, cost, care quality and access
15. An applicant with existing facilities/services must demonstrate previous evidence of providing quality care

Certain projects must also conform with rules codified in 10A NCAC 14C.

Certificate of Need Application Filing Fee

Every CON applicant must submit a $5,000 application fee plus .3% of the amount of proposed capital expenditures over $1,000,000. The application fee can never exceed $50,000.

Additional Sources

(links good as of January 2024)

North Carolina Division of Health Service Regulation
https://info.ncdhhs.gov/dhsr/index.html

CON Statute
https://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_131E/Article_9.html

CON Rules

http://reports.oah.state.nc.us/ncac/title%2010a%20-%20health%20and%20human%20services/chapter%2014%20-%20director,%20division%20of%20health%20service%20regulation/subchapter%20c/subchapter%20c%20rules.html

North Carolina State Medical Facilities Plan
https://info.ncdhhs.gov/dhsr/ncsmfp/index.html

CON Application Forms
Available by submitting a request to the project analyst for the county where the project will be located. Contact information for CON staff is available at: https://info.ncdhhs.gov/dhsr/coneed/staff.html