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How Certificate of Need Reform Is Impacting Ambulatory Surgery Centers and What It Means for Your Business

    Client Alerts
  • September 27, 2024

Recent Certificate of Need (CON) reform will likely lead to increased activity in ambulatory surgery center (ASC) transactions and expansion. As we covered in a Parker Poe webinar last week, North Carolina, South Carolina, Tennessee, and Georgia are key markets for investors, hospitals, management companies, and physicians to focus for investment in ASCs and ancillary services related to ASCs during the next several years.

Here’s an overview of the flurry of recent changes to CON laws by state and transactional and regulatory considerations for those involved in the ASC industry.

North Carolina

Effective November 21, 2025, there will no longer be a requirement to obtain a CON for ASCs located in counties with a population in excess of 125,000 people. Exempt ASCs will still need to satisfy certain charity care requirements and report data related to such requirements to the state on an annual basis.

South Carolina

Certificate of need laws have been repealed for South Carolina ASCs. However, ASCs are still subject to certain licensure requirements, including charity care and annual reporting.

Tennessee

Effective December 1, 2027, the CON requirement for ASCs will be lifted. Following the repeal of CON restrictions, ASCs unaffiliated with hospitals will be required to participate in TennCare and provide an amount of care to TennCare enrollees and charity care comparable to hospital-based ASCs based on procedure mix. Additionally, the Tennessee Health Facilities Commission is tasked with creating a six-year plan to study the impact of CON reform, the results of which will likely impact future regulation in the state.

Georgia

Georgia now exempts certain single-specialty ASCs from its CON laws if such ASCs are owned by a single physician or practice and fall below certain capital expenditure and operating room thresholds. Additionally, non-owner physicians are permitted to perform procedures at the ASC in the same specialty. Certain joint-ventured ASCs with hospitals are also exempt from Georgia CON requirements and the new law permits outside managers. Further recommendations are due from the Department of Community Health in December, so the industry can expect more legislation and rulemaking in Georgia in the coming months.

Final Takeaway

With CON reform comes increased transactional activity and expansion of ASCs in the impacted markets. Even though CON restrictions may be eliminated or reduced in these states, there are still numerous licensure and other regulations to consider when developing, acquiring, or expanding an ASC.

It is critical to ensure that your ASC is compliant with all federal and state laws and regulations, including the Anti-Kickback law, state licensure requirements, Centers for Medicare & Medicaid (CMS) requirements, and federal and state securities laws. As ASCs remain highly regulated, it is important to partner with legal counsel experienced with these CON laws, as well as the plethora of other laws and regulations applicable to ASC ownership and operations.

You can replay the September 25 webinar here. The presentation slides can be found here.

Mark your calendars for October 30 at noon for a second webinar, which will cover regulatory and market updates, including an outlook for 2025. You can register early here.

For more information, please contact me or your regular Parker Poe contact. You can also subscribe to our latest alerts and insights here.