Since their origin almost 60 years ago, certificate of need (CON) laws have remained uniquely contentious. These laws require healthcare providers to prove a community need for their services before opening or expanding. They are not safety regulations, but rather economic planning measures, purportedly designed to manage health care expenditures efficiently.

The Competitor’s Veto

In the 35 states with CON legislation, providers often must convince their own competitors to allow them to operate. Unsurprisingly, they often fail. Businesses do not typically welcome competition. 

Even if such laws applied just to flower shops, they would stifle competition and eliminate consumer options. But in health care, removing options is life-threatening and astronomically costly. CON states consistently report longer travel and wait times, as well as higher prices. 

This situation stems from the fact that certificates are expensive and difficult to procure. After adhering to all regulations proving they are safe, providers are tasked with proving they are needed. Established healthcare businesses have the means to fight new competition; hopeful new providers often do not have the means to fight back. Consequently, they often give up.

CON Application By The Dollar

  • In North Carolina, a hospital CON application fee is at least $32,000, and total fees can exceed $5 million.
  • Iowa applicants pay, on average, $15,774 in application fees alone.
  • In West Virginia, application fees can be as high as $35,000, plus enormous consulting and compliance expenditures.
  • In North Carolina, Dr. Jay Singleton’s lawyer warned him his legal fees to fight his CON rejection would likely reach $400,000. 
  • In New York, a hospital CON fee is $2,000, plus a .55% construction fee. This totals $5,502,000 for a $100 million hospital. 
  • A Washington application costs up to $3 million.

CON Application By The Day (Or Year)

  • In South Carolina, it takes an average of 134 days to receive a decision on an application, but it can take more than 10 years. 
  • Iowa CON decisions take up to two years when no competitors object. But competitors’ protests can easily increase it to five years, even when the competitors themselves admit a community need for the proposed new service.
  • North Carolina applications may initially take 150 days, but going through the likely appeals takes more than three years.
  • In Washington, the best-case application scenario lasts eight months.
  • The aforementioned Dr. Singleton has been appealing for his CON for 14 years.
  • Virginia has assembled multiple CON task forces over almost 30 years. Established healthcare behemoths argue against hopeful new providers, and the behemoths always win.

CON Application By The Outcome

  • Over the past four years, Washington has denied 37 applications and approved 24
  • One in five CON applications in Tennessee fails, totaling 158 rejections over 20 years.
  • Tennessee has seen a 70% decrease in CON applications over the past two decades.
  • In 2019, Michigan said it would need about 3,000 new nursing home beds. CON applications spiked. After existing nursing home businesses complained, the health department lowered that number by about ten-fold, and four of five CON applications were denied or withdrawn.
  • Florida approves fewer than half of their CON applications.
  • In West Virginia, would-be providers withdraw an average of four applications per year after competitors protest.  

These numbers are obviously a sample, but they clearly illustrate that CON laws present a major barrier to entry. Providers are quitting in despair instead of opening facilities that are desperately needed by their communities. Both healthcare workers and patients have been held hostage for too long by the competitor’s veto, and lawmakers have a duty to eliminate these counterproductive rules.