Securing a certificate of need is a difficult process. I should know. I've done it twice for the Castleman Surgery Center in Southgate, Mich. Getting the initial CON, which involved adding a single OR to our one-room center, was tough. Getting approval to expand to four ORs wasn't any easier.

I'm glad I won't soon be applying for a third CON, because my home state of Michigan proposed changes in December that would make it exceedingly difficult to get a CON. The Michigan Certificate of Need Commission wants to restrict the definition of surgery to only those procedures that are performed in an OR, eliminating procedures commonly cited on applications such as endoscopy or mole removal. The commission wants to avoid building excess surgical capacity in Michigan, which has 48 Medicare-certified surgery centers - nine more than it had five years ago. Another 17 surgery center applications are awaiting state approval.

Under state law, hospitals and physician groups have to prove that new medical capacity is needed by showing they can meet volume benchmarks before opening a new OR through a CON application. The narrowed definition reduces the number of procedures that you can count toward surgical volume. A small number of states with CON programs exempt selected facilities - usually small, often single-specialty, freestanding outpatient surgery centers - from regulation.

Depending on the level of regulatory scrutiny in your state (see "CON Regulation by State"), you may have a harder time than most getting your project off the ground. Here are some tips for successfully filing a CON request.

State your intent
In Michigan, I needed to fill out a letter of intent before applying for the CON. If your state requires the same, you'll need to list such demographic info as the name of the facility, its address, the contact persons for financial and patient concerns, project summary, project costs and source of funds.

Before you submit your LOI, make sure you can justify a need for the ASC in the community. After all, that's the whole point of the CON process. Since the state doesn't want a surgery center on every corner, you'll need to rationalize your case volume. To receive a CON, you need to account for 1,200 procedures per room, per year. In the first year, you may be able to reach 75 percent of that number (900) and still get CON approval, but you'll need to hit the 1,200 mark in the second year.

In addition to considering neighboring surgery centers, you also must ensure there is volume available without stealing cases from local hospitals. When trying to secure my first CON, a staffer from the state department of health sent me a list of three community hospitals from which I couldn't take cases. In other words, surgeons on staff at those hospitals couldn't use surgeries scheduled at those facilities to satisfy my 1,200-procedure threshold per OR. I sidestepped that issue by counting the office procedures performed by the surgeons I was recruiting. As is the case in Michigan, however, counting office procedures may no longer be allowed, so check with your state department of health.

If you're planning a multi-specialty ASC, check with your state department of health for guidelines on how cases performed in procedure rooms (GI and pain, for example) affect your numbers. In Michigan, you can collect a facility fee for these cases but you can't count these cases as part of your volume requirement because they weren't done in the OR proper.

Don't forget to look in-house. I counted the excess volume from my two current ORs when applying for my second CON (to add the two additional ORs).

While waiting for LOI approval, download a CON application from the state department of health's Web site and complete as much of it as you can to minimize a time lapse between receiving LOI approval and submitting the application. If you're able to obtain quotes for such things as equipment, building costs and financing charges, you may even be able to complete the entire application.

Obviously you don't want to pay for quotes if you don't have CON approval. For example, opening a new facility will require a great deal of equipment purchasing. You may need the help of an equipment consultant to figure out what's needed. Before committing to a contract with a consulting group, make sure you have language in the agreement that states you'll need their services only if you receive the CON.

Sweat the small stuff
Here are some small, and not-so-small, details you need to pay attention to when going through the CON approval process.

• When are CON applications reviewed? Before sending in your CON application, go to your state government's Web site and review what times of the year it reviews applications. I submitted mine shortly before the next scheduled review period. Otherwise, I would have had to wait until the next review period three months away.
• Have a backup plan. You may need to offer alternatives to your proposed project and financial plans, and the costs of those alternatives. Usually the alternative is much more costly and that will justify your proposed project. On our application, one alternative to expanding our ASC was to use an existing facility. The facility, however, didn't provide the equipment we needed (such as a YAG laser) so that's why I explained this wasn't an optimal alternative. Adding a second floor to our building was an alternative I offered but explained it was more costly than moving out our medical practice and renovating existing space. A financing alternative to using a commercial loan was to have existing shareholders put up the revenue for the project. The shareholders didn't want to provide financial backing, so this wasn't viable.
• Check it twice. Crosscheck your figures and calculations. Several pages request similar numbers, so verify that they all match. The state is adamant about this. If numbers don't coincide on all pages, it will send each one back for you to correct and resubmit.

I was guilty of this error, so I can tell you with certainty that going back to recalculate months after the fact was a huge pain. When I added the amount needed to complete the entire project, it totaled $1,418,323. I listed that figure on the first sheet of the application. On a different form requesting info about the amount to be financed, I rounded the figure to $1,420,000. This was not acceptable. The state sent each sheet back to me, which caused a two-week delay. I could have avoided the whole mess by double-checking and comparing all numbers on each page before I sent the application in for approval.

• Take work home. I did a lot of the work at home during the evening or weekends because trying to fill it out while handling the day-to-day interruptions of running the facility caused me to feel stressed. When I was home without interruptions, I got a lot more done and felt relaxed. You also need to realize it will take time for people to get back to you with the info you requested, so allow yourself plenty of time to gather information.
• Coordinate inspections. Make sure your contractor or architect set up the appropriate inspections with state and local public officials (the fire marshal and engineers, for example) I learned this the hard way; we didn't set up inspections until the last minute, causing a 45-day delay in opening.

To avoid mix-ups, define everybody's roles and responsibilities in writing. Include inspections, a timeline and phasing of construction, weekly meetings with the general contractor and a penalty clause in the contractor's contract regarding delay of completion (in the same respect, include a reward clause for an early completion).

Longer than you imagine
Make a timeline for the entire project. Try to adhere to it and constantly remind those working with you on the project of the importance of finishing the construction on time.

The entire project, from filing the LOI until final inspection, will cost more than you thought and take longer than you could imagine. I would add four weeks to six weeks to the project and add 15 percent to the budget to cover contingency costs. Remember, after your CON is approved, you can only spend 15 percent more on expenses. Any number over 15 percent will require approval for a new CON.