Certificate of Need
Thirty-six states currently use certificate of need (CON) laws, which aim to promote consolidation of health care providers, limit duplication of services, and slow the rise of health care prices.
States require CON commission approval for a wide range of expenditures, including the construction of new hospitals, purchase of major pieces of medical technology, or offering of new medical procedures.
Recent studies have shown CON laws fail to achieve many of their stated goals and have instead reduced the availability of health care services. CON laws raise the price of medical care by preventing new medical providers from competing with existing hospitals. CON laws also reduce the availability of medical equipment and hospital beds.
The documented negative effects of CON laws have led many experts to call for their repeal. The primary goal of CON laws is to manage health care costs, yet studies find they have actually increased costs for consumers by hindering competition and forcing providers to use older facilities and equipment.
The most significant step lawmakers can take in this area is to repeal certificate of need laws. If full repeal is not possible, states should limit the application of CON restrictions to larger projects. This would allow health care facilities to take on smaller projects without the overhead of the CON process. Any CON decisions should be based on legitimate financial and market-oriented factors, and existing companies should not be given undue influence over the establishment or expansion of a competitor.