Certificate of Need Basics

Legislative Policy:

It is declared to be the public policy of this state that the establishment and modification of healthcare institutions, facilities, and services must be accomplished in a manner that promotes access to necessary, high quality, and cost effective services for the health care of the people of this state.  To this end, this section applies equitably to all healthcare entities, regardless of ownership or type, except those owned and operated by the United States government.

The Tennessee Health Facilities Commission  Certificate of Need Board consists of:

  • Comptroller of the Treasury or his/her designee;
  • Director of TennCare or his/her designee;
  • Commissioner of the Department of Commerce and Insurance or his/her designee;
  • One (1) consumer representative appointed by the Speaker of the Senate;
  • One (1) consumer representative appointed by the Speaker of the House of Representatives; and
  • Six (6) members appointed by the Governor:            

a. One (1) consumer representative;

b. One (1) person who has recent experience as an executive officer of a hospital or hospital system who may be appointed from lists of qualified persons submitted by interested health care groups including, but not limited to, the Tennessee Hospital Association;

c. One (1) representative of the nursing home industry who may be appointed from lists of qualified persons submitted by interested health care groups including, but not limited to, the Tennessee Health Care Association;

d. One (1) duly licensed physician who may be appointed from lists of qualified persons submitted by interested medical groups including, but not limited to, the Tennessee Medical Association;

e. One (1) representative of the home care industry who may be appointed from lists of qualified person submitted by interested home care groups including, but not limited to, the Tennessee Association of Home Care; and

f. One (1) representative of the ambulatory surgical treatment center industry.

Institutions that Require a Certificate of Need prior to Establishment, Licensure, or Certification:

The construction, development, or other establishment of any type of healthcare institution.

"Healthcare Institution" means an agency, institution, facility, or place, whether publicly or privately owned or operated, that provides health services and that is one (1) of the following:

  • Hospital;
  • Nursing Home;
  • Ambulatory Surgical Treatment Center (ASTC);
  • Intellectual Disability Institutional Habilitation Facility;
  • Home Care Organization (Home Health and Hospice);
  • Outpatient Diagnostic Center (ODC);
  • Rehabilitation Facility;
  • Residential Hospice; and
  • Nonresidential Substitution-based Treatment Center for Opiate Addiction

"Healthcare Institutions" do not include:

  • Ground Ambulance
  • Home for the Aged
  • Premises occupied exclusively as the professional practice office of a physician, dentist, administrative office of a public healthcare agency, Christian Science sanatorium, mental health residential treatment facility, or mental health hospital.

Exceptions:

  • Home care organization that is authorized to provide only professional support services.
  • Hospital to operate a nonresidential substitution based treatment center for opiate addiction if the treatment center is located on the same campus as the operating hospital.
  • Establishment of a home health agency limited to providing home health services under the Federal Energy Employees Occupational Illness Compensation Program Act of 2000.
  • Establishment of a home health agency limited to providing home health services to patients less than eighteen (18) years of age.
  • Establishment of a home care organization or residential hospice limited to providing hospice services to patients under the care of a healthcare research institution.
  • Counties designated as economically distressed eligible counties by the Department of Economic and Community Development pursuant to TCA 67-6-104 and have no hospital that is actively licensed by the Tennessee Health Facilities Commission. For FY2023, those counties are Lake and Perry Counties.

Following Services That Require Certificate of Need Before Any Person Initiates:

  • Burn Unit;
  • Neonatal Intensive Care Unit;
  • Open Heart Surgery;
  • Organ Transplantation;
  • Home Health;
  • Cardiac Catheterization;
  • Linear Accelerator
  • Hospice; and
  • Opiate Addiction Treatment (Provided through a facility licensed as a nonresidential substitution-based treatment center for opiate addiction).

Following Actions that Require a Certificate of Need:

  • Any change in the bed complement, regardless of cost, of a health care institution which:

a. Increases by one (1) or more the number of nursing home beds; however, a nursing home may increase its total number of licensed beds by the lesser of ten (10) beds or ten percent (10%) of its licensed capacity no more frequently than one (1) time every three (3) years without obtaining a certificate of need.

b. Redistributes beds from acute to long term care;

c. Redistributes from any category to acute, rehabilitation, or long term care, if at the time of redistribution the healthcare institution does not have beds licensed for the category to which the beds will be redistributed; or

d. Relocates beds to another facility or site.

  • A change in the location of existing or certified facilities providing healthcare services and healthcare institutions, other than the relocation of the principal office of a home health agency or hospice within its licensed service area. However, the executive director may issue an exemption for the relocation of existing healthcare institutions and approved services pursuant to TCA 68-11-1607(a)(4).

  • The following actions in counties with a population of 175,000 or less, according to the 2010 federal census or any subsequent federal census:

a. Initiation of magnetic resonance imaging (MRI) services; or

b. Increasing the number of magnetic resonance imaging machines, except for replacing or decommisisoning an existing machine.

  • The following actions in counties with a population of 175,000 or more, according to the 2010 federal census or any subsequent federal census:

a. Initiation of magnetic resonance imaging (MRI) services or increasing the number of MRI machines only requires a certificate of need if services are provided to a patient fourteen (14) years of age or younger on more than five (5) occasions per year.

b. Establishment of a satellite emergency department facility or a satellite inpatient facility by a hospital at a location other than the hospital's main campus.

c. Initiation of positron emission tomography (PET) services in a county with a population of 175,000 or less, according to the 2010 federal census or any subsequent federal census.

No actions requiring a certificate of need in Lake and Perry Counties, because they are designated as economically distressed eligible counties by the Department of Economic and Community Development pursuant to TCA 67-6-104 and have no hospital that is actively licensed by the Tennessee Health Facilities Commission.