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.”