News: CJ Exclusives

Committee Rejects Proposal To Reduce MRI Acquisition Costs

Rural hospitals must pay hefty application fee to buy machines they already lease

A petition to ease restrictions on MRI machine ownership for community hospitals was struck down Wednesday by the State Health Coordinating Council’s Technology and Equipment Committee, a division of the the North Carolina Department of Health and Human Services.

The petition, filed by the Cape Fear Valley Health System, headquartered in Fayetteville, requested that community hospitals be able to justify purchase of their own MRI units, regardless of whether the SHCC determines there is a “need” for more.

Under current Certificate of Need rules, a community hospital that is leasing a mobile MRI unit can apply to buy its own MRI unit only if usage exceeds 1,716 scans, the current minimum threshold set by CON for rural hospitals.

The petition sought to create an exception for community hospitals by allowing them to justify a simple swap from leasing to buying MRI machines.

Although committee members unanimously voted down the petition, they also addressed the hardships rural hospitals face when trying to acquire updated medical equipment under current CON rules.

“It’s sort of a chicken and an egg situation,” said committee member Trey Adams, who represents small businesses. “It’s really tough for rural hospitals to get the volumes on a mobile [MRI unit] to get to the point where they would trigger the need [for a fixed unit].”

Some on the committee, however, stated that processes are already in place to address the issues faced by local hospitals who want to purchase their own MRI equipment.

“There’s a special needs review process in place that isn’t going to change,” said Kelly Hollis of Research Triangle Institute Health Solutions, whose clients include major pharmaceutical and medical device manufacturing companies.  “Why wouldn’t we leave it as it is and encourage hospitals that have a need to apply for just a special needs determination?”

Adams said the costs of applying for a CON merely to buy a currently leased MRI unit are burdensome, especially for rural hospitals. He suggested lowering the MRI usage requirements for rural hospitals that now lease their equipment but wish to purchase machines.

“It’s an expensive process to apply for [equipment],” Adams said. “Is that necessary? Shouldn’t we rewrite this methodology to make it more feasible in terms of time and cost associated with doing that?”

The base fee for a CON application is currently $5,000, with an additional charge of 0.3 percent of requested equipment costing $1,000,000 or more. The result is an average fee of $30,000 — nonrefundable to the applicant — even if the application is denied.

“Implicit in the agency’s analysis is that the special needs petition channel remains available for local needs, said Christopher Ullrich, a radiologist and committee member. “What it’s designed to do is to get away from a one-size-fits-all [system] — recognizing that you can’t write a rule that fits every [situation]. That special needs process is meant to identify adjustments that need to be made based on local conditions.”

The committee moved to consider revising CON rules for MRI usage in the coming months, and will meet again April 27 for further discussion.