North Carolina CON Update: Psychiatric & Chemical Dependency Treatment Capacities

North Carolina is poised to enact significant certificate of need (CON) reforms that are expected to eliminate the need to secure CON approvals for the development of new psychiatric and chemical dependency treatment capacities in North Carolina. These long-awaited CON reforms – along with those impacting other health care offerings – are part of the much-publicized expansion of North Carolina’s Medicaid program and are likely to be finalized as part of the adoption of the State’s budget in the summer of 2023. 

The lifting of behavioral health CON restrictions is a move widely applauded across North Carolina. New market entrants and existing operators may now look to expand to meet the previously unmet need for behavioral health services in North Carolina by developing all-new facilities or by adding new beds or wings to existing facilities. This “sea change” may create a race-to-market for behavioral health providers seeking to claim territories and relationships, especially in some high-population areas of North Carolina.

Those seeking to fulfill long-held aspirations for expanding the reach of behavioral health offerings in North Carolina should be looking now to implement strategies that will allow for expedient action on project plans. While the changes in the law will relieve providers from the burden of pursuing CON approvals, other regulatory considerations, such as zoning and licensure requirements, will remain in place for psychiatric hospitals and chemical dependency treatment facilities in North Carolina. Informed advice may help make the difference in the timing of entries into what promises to be newly competitive behavioral health marketplaces across our State.

The change in the CON landscape can also be expected to heighten interest in re-purposing existing facilities and structures to accommodate new behavioral health offerings that previously required a time-consuming and expensive foray into the CON process. The new-found ability to expand behavioral health facilities without CON review may give rise to sales and acquisitions of buildings (including long-term care facilities such as skilled nursing, assisted living, and senior housing buildings) for future use as behavioral health facilities. 

In the months ahead, CON reforms in the behavioral health space will usher in a new era for facility growth and expansion. Patients across our State stand to benefit from increased access to needed services and compassionate care. Providers who act now to develop and implement strategic plans will likely be at the forefront of this new wave of health care delivery in North Carolina.

For more information, please contact Joy Heath at jheath@williamsmullen.com.