Executive Summary
- Certificate-of-Need (CON) laws in 36 states require individuals who wish to expand or start a new healthcare business first to apply to state regulators and prove there is a “need” for their services.
- CON laws also allow competitors to object to a new or expanding business, effectively grating them a competitor’s veto.
- CON regulations involve a litigation-like process that is time-consuming and expensive, often taking several years and up to hundreds of thousands of dollars in application and attorneys’ fees.
- For example, it took five years and $175,000 before Progressive Radiology secured permission from CON regulators simply to purchase a second MRI machine.
- Certificate-of-Need Laws are barriers to entry that raise healthcare prices and hamstring the ability of states to deal with public health emergencies.
- During the coronavirus pandemic, many states temporarily waived CON law requirements in order to grant businesses the flexibility necessary to respond to the healthcare crisis.
- The Department of Justice and the Federal Trade Commission have both condemned Certificate-of-Need laws, concluding they “impede the efficient performance of the health care markets…. create barriers to entry and expansion to the detriment of health care competition and consumers … undercut consumer choice, stifle innovation, and weaken markets’ ability to contain health care costs.”
