New Jersey Statutes Title 26. Health and Vital Statistics 26 § 2H-6.1

a. The regulatory structure for the State's health care delivery system put in place in the 1970's was an outgrowth of federal legislation predicated on the idea that the most satisfactory means of controlling health care costs was the allocation of health care resources by government through a highly centralized health planning mechanism;

b. For two decades, the State established strong controls over the health care delivery system by such means as the setting of hospital rates and through the certificate of need program, which allocated the provision of services among providers, regulated hospital expansion, and regulated the purchase of equipment and the use of medical technology;

c. The evolution of market-based means of controlling costs, most notably the growth of managed care, and the rapid development of new medical techniques and innovations in medical technology exposed the inefficiencies inherent in centralized health care planning, which was unable to respond quickly to the changing needs of the health care system;

d. In 1992, the Legislature began to dismantle the existing regulatory structure, responding to the needs of the health care system in New Jersey by eliminating hospital rate setting, leaving hospital charges to be established through negotiation between hospitals and those who paid for health care services and, by providing access to health insurance to all citizens of the State, without regard to health status or preexisting condition, contributed to the significant changes taking place in the underlying economics of the health care delivery system by helping to create a more competitive health care environment;

e. The certificate of need program is the last remaining vestige of the highly regulated environment, and its original purpose, which was to control costs by limiting the proliferation of health care services through State control of those services, has been undermined by the significant changes in the economics of the health care system that have taken place since its inception;

f. Decisions as to health care services, the acquisition of medical technology, and the expansion of facilities can best be made by the health care provider based on his own expertise in delivering health care services to the community he serves;

g. The appropriate role of the State with respect to services no longer subject to certificate of need is that of licensure of facilities and services, to ensure the quality of care;

h. For reasons of maintaining the quality of certain health care services, a limitation of the proliferation of such services may continue to be essential to protect the viability of the services as well as the providers now rendering them, to protect the role of such institutions as urban hospitals, whose importance to the Statewide health care system is indisputable, and to guard against the closing of important facilities and the transfer of services from facilities in a manner which is harmful to the public interest;  and

i. Therefore, it is essential, in order to promote greater efficiency in the State's health care delivery system, to eliminate the certificate of need requirement for many services immediately, to eliminate the requirement for other services over a more extended period, and to create a commission to consider whether certain remaining health care services should continue to be subject to a certificate of need requirement in the interest of the well-being of the public and to ensure the maintenance of quality health care throughout the State.