May 072014

Health planning has been a long-running theme in American health policy, dating back to the 1940s. Seen by its advocates as a movement, such planning aimed to make widely available coordinated health facilities and services, especially hospitals. It also aimed to foster the orderly and efficient development of hospitals in order to meet each community’s needs, while avoiding duplication of services and facilities and oversupply. (Melhado, 2006)

The 1946 Hill-Burton Hospital Construction Act was the first federal effort to promote health planning. It mandated that states assess the need for hospitals and establish statewide priorities for the allocation of funds for new hospitals. Hospitals receiving Hill-Burton funds were required to provide charity care to the medically indigent. Amendments to the Hill-Burton Act in 1962 mandated the formation of state and regional health planning agencies supported by the federal government. A voluntary not-for-profit network of regional health planning agencies in major metropolitan areas conducted needs analyses and advised states on construction priorities in their areas.

The 1974 National Health Planning and Resources Development Act required states to manage the growth of hospitals and other healthcare facilities. The law reflected the need to control inflationary increases in the cost of healthcare. To this end, it created the most extensive system of community health planning agencies the nation has ever had, and followed a template of one Health Systems Agency (HAS) for every million people. An array of agencies emerged with different names but similar functions: State Health Planning and Development Agencies (SHPDAs), Statewide Health Coordinating Councils (SHCCs), and others. These agencies were designed to implement the Certificate of Need (CON) programs through which hospitals and other facilities seeking to make capital outlays would first have to receive state approval. The Older Americans Act directed the State Units on Aging (SUAs) and the Area Agencies on Aging (AAAs) to relate their planning efforts to those led by the HSAs.

Congress intended for this elaborate planning structure to remedy perceived deficiencies in the performance of the healthcare industry as it then existed. The Act aimed to address problems that arose in three broad categories:

  • The failure of marketplace forces to produce efficient investment in facilities
  • The need to minimize the costs of health care
  • The uneven and fragmented distribution of healthcare facilities.

Several years later, however, studies evaluating these new efforts found that health planning had proven to be ineffective in controlling capital expenditures. In addition, advocates for greater competition in the health sector argued that, where health planning was effective, it actually raised costs by protecting the franchises of unneeded and inefficient hospitals. (Bice, 1990)

Some of the failure in health planning has been attributed to the lack of assurance of resources to meet communities’ needs. In addition, consumers and providers came to the process with different levels of knowledge and understanding, and their unwillingness to compromise. In the end, the HSAs failed to control the expansion of the system. Nonetheless, although Congress repealed the federal Health Planning law in 1986, many states continue to operate CON programs. (National Conference of State Legislators)

We continue to face the vexing challenges lawmakers sought to address in the early 70s—and, perhaps, thanks to new technologies for monitoring, assessing, and evaluating programs, we have new management tools to support contemporary efforts. We believe that MediCaring communities, which would rely on local authority and monitoring to address needs of a community’s elders, and align resources accordingly, are a new way to meet old challenges.

It still seems unlikely that individuals and institutions now thriving economically in the chaos of a top-heavy, over-medicalized system will simply sign up to try something new—especially something that shifts profits and funding mechanisms to balance medical treatment and services with social services and supports. The public—and frail elders and their families—must constantly insist on better use of public funds.

The system will not correct itself. Our current Wild West focuses on developing and deploying services to match business opportunities. We need to re-arrange that system so that there are incentives for having just-about-the-right service supply for all services—and an efficient mechanism to coordinate them. New administrative structures would be necessary to make such a system work—but the room to build such a system exists; we now need the will.

The reality is that we have substantial evidence of unmet need—and a system in which overtreatment remains the order of the day. This combination leads to substantial suffering and unnecessary economic burdens for individuals and for society. We must develop a more thoughtful and deliberate effort that regularizes processes, establishes more efficient standard practices, and shifts services toward effective and essential care. Such an approach might lead to improved performance, better management, and better care—a riff on the Triple Aim.

The structure of such a management structure is open to dialogue and testing. Some communities may find that it can begin to change simply by compiling existing data on its frail elders, particularly their service utilization and unmet needs; comparing that data with past performance, or with performance levels in other regions; and deliberately opting to shift the balance of overuse and undersupply.

Other communities may need a different approach. Some, for example, might launch stakeholder coalitions with sufficient staff to manage data required to stand up a new system. Others may find that substantial funding and authority are essential. In many instances, pilot programs, start-up funds for designing new models of services delivery, altered financial incentives and penalties, and other controls may be necessary.

But a first step for most might be the rebirth of the HSA, only this time, with a clear focus on and commitment to eldercare. We’ve tried many names for such a body, from ElderBoard to local monitoring authority. Whatever the name, the task will be the same: A revolution in how we design, deliver, manage, and fund services for frail elders.


Bice, T. Health Planning and Regulation Effects on Hospital Costs. Annual Review of Public Health (1980), no. 1, pp. 137-61. 6.

Melhado EM. Health Planning in the United States the Decline of Public-interest Policymaking. Milbank Q. Jun 2006; 84(2): 359–440.

National Conference of State Legislatures, accessed online 4/13/14.

key words: MediCaring book, Joanne Lynn, Janice Lynch Schuster, Judy Peres, health systems agency, elder board