Avoiding Health Care Project Delays

This post really is an advertisement for the services of Kelley Cawthorne, but also useful glimpse at the bureaucratic red tape which strangles health care projects.  This post is referring, in large part, to the Michigan Certificate-of-Need, which is awarded by MDHHS' Certificate-of-Need Commission.

Kelley Cawthorne is a privately held, full-service lobby firm based in Lansing, Michigan which was founded in 1999.  In 2023, they merged with Columbus, Ohio based Pappas & Associates (TPP), which was itself founded in 1995.  Kelley Cawthorne is led by Melissa McKinley and Rob Elhenicky.  Pappas & Associates continues to be led by Tom Pappas, a former Ohio legislator: 

https://www.crainsdetroit.com/crains-content-studio/avoid-delays-healthcare-project-launch

Why does timing matter?
Missing one step can stall your healthcare project for months
By Carrie Linderoth - June 02, 2025

After we become adults, we look forward to a life with less rules and more freedom. But as time passes, we trade our parents’ and provincial rules for statutes and administrative procedures that govern much of our daily lives whether we realize it or not. This is particularly true as we look to develop businesses, provide services, and address client needs.

Statutory provisions are the first things we think about when looking to transact business. And while laws are important, statutes often delegate their legal authority to appointed departments who then promulgate rules. These rules are typically administered by civil servants and are subject to a process that has a specifically articulated timeline.

The timelines are often put forward by regulators to offer certainty to applicants when engaging in the process. But what can occur instead are significant delays. And, in some cases an inability to move forward. This is particularly true for any proposed project that requires a permit or another type of State approval to operate. New market entrants often invest a lot of resources in equipment, real estate, and staffing to bring a venture to fruition, only to be met with resistance from a process that is not navigable by a lay person.

As such, it is important to research what process is prescribed in rules before making decisions that can cost millions of dollars both in resources and in time. Michigan has nuanced rules across most Departments that can add months and years to the start of a project. Developing a detailed business plan and procuring resources can go to waste if you don’t first determine when you can begin operations. However, being proactive on understanding timelines can save money, reduce stress and create opportunities for success. Additionally, becoming an expert, or finding an expert to assist in navigating the processes can distinguish your project from other participants and create a competitive advantage.

For example, buying equipment before regulatory approval is issued forces an applicant to expend dollars and pay interest on something that cannot be used. But, understanding the timeline and process for approval can allow additional negotiating time and an opportunity to defer financial obligations until actual operations have started and money is coming into the venture.

Before undertaking a new venture, here are some steps to consider:

1. Research the statute that pertains to your project – Review the law that oversees your project to make sure your plans meet the prescribed regulations.

2. Determine if the statutes delegates oversight to a department that has set forth rules – take a second look at all of the provisions to ensure you didn’t miss anything.

3. Review rules that govern the process for beginning your project – make certain your review includes the conditions and timeline for project approval and continuation.

4. Talk to the department that oversees the rules – learn how the department administers the rules to avoid unforeseen delays or disapproval.

5. Find an expert that practices in the field – it’s easy to misinterpret the intent of a regulatory provision, and working with someone with experience can eliminate unnecessary hurdles.

In the healthcare space, background research is particularly important as regulation at every level impacts decisions. Federal rules and regulations set forth a process that may or may not run concurrent to State and local regulations. For example, providers looking to establish a new service in Michigan are subject to local rules such as zoning when determining a location. Secondarily the State may have licensing and safety regulations overseeing the ability to provide the service at all. And the Federal Government has a key role in the success or failure of a service line as they ultimately oversee the Centers for Medicare and Medicaid (CMS) and determine an applicant’s eligibility for reimbursement from government payers.

Timing is the most critical component in these transactions. All these levels have lead time required to process and potentially approve a project. However, waiting for one process to be complete before beginning the next level of applications can impact the viability of a project. In this instance, if state and local decision makers approve a new healthcare service, but CMS has not granted approval for reimbursement by government payers, the project could fail before it even starts. The same holds true for private third-party payors with credentialing requirements.

Financing obligations begin as soon as equipment and services are obtained. But if the revenue stream is dependent upon a separate approval process that has a lag time of several months, insolvency becomes a likely reality as expenses far exceed income. Even if projects are eventually approved for reimbursement, the financial obligations can become hard to overcome after an extended period of no income. However, a carefully timed concurrent application plan can provide a new market entrant with the ability to bring a project online and receive reimbursement in a similar timeframe to create the best opportunity for success.

Great ideas don’t get the desired results if they are not executed at the right time. But good ideas and great planning can be a recipe for success. Following a commonsense plan with the help of experience in the field can set your project apart from the masses. It sounds cliché, but you never get a second chance to make a first impression – so make your project’s first impression the best having a plan to make it thrive.

Don’t navigate healthcare policy alone. Contact Carrie Linderoth today at clinderoth@kelley-cawthorne.com for trusted advice and support.

Carrie Linderoth is a partner at Kelley Cawthorne who specializes in healthcare policy, Certificate-of-Need, and Michigan Medicaid issues.