Certificate of need (CON) laws have remained controversial for the 60 years they have existed. So why have they not all been repealed? Who is keeping the CON alive, and how do they do it?

Recent hearings in Kentucky illuminate the issue. 

A CON Summary

A certificate of need law is exactly what the name suggests. It requires a new or expanding healthcare business to prove to a government entity that the community needs the additional services. After a hearing, the government grants a certificate based on supposed need, rather than on safety, effectiveness, or any other typical guideline.

During the CON hearing, community members can express support or disapproval of the proposed venture. This usually includes representatives of existing healthcare businesses, who can testify that the community does not need any more healthcare services. As economics and law professor Thomas Stratmann explained, a CON hearing is the healthcare equivalent of Burger King testifying that the community does not need a new McDonald’s. 

So, Who Would Support CON? 

Like many of the 35 states that have retained CON legislation since the federal government stopped supporting (and subsidizing) it in 1986, Kentucky recently revisited the issue. A look at some of those hearings gave insight into who typically takes which side. As anyone familiar with human nature has probably guessed, the people arguing in favor of the healthcare Burger King were… representatives for healthcare Burger King.

The list of CON advocates was predictably lopsided. It included such organizations as the Kentucky Association of Health Care Facilities, LeadingAge (an association of more than 5,000 elder care businesses), the Kentucky Home Care Association, and the Kentucky Hospital Association (KHA). These huge associations have access to full lobbying coffers, with the means to send the best representation to congressional hearings. In fact, the Kentucky Hospital Association was the fourth-largest spender in Kentucky’s 2023 lobbying. Note from their websites that they were also created before, or just after, Kentucky’s CON laws were enacted. They had the benefit of entering the arena in time to prevent any competition from joining them.

Senator Stephen Meredith also championed CON, and a look into his background reveals a likely reason. He was formerly the CEO of a large and established hospital. This is a fine accomplishment, but it gives him the perspective of a hospital CEO, not a potential patient.

Viewers might also have been bemused when they saw that hospital associations appeared willing to make concessions. However, the reforms the KHA pitched merit a closer look. They included several suggestions to allow “existing acute care hospitals” to qualify for special privileges, such as expedited review. Remember that CON laws also include restrictions on expansion, so removing those is beneficial to existing hospitals. Ultimately, what their representatives were suggesting was that their process for obtaining a CON should be easier. 

Northern Kentucky’s St. Elizabeth Healthcare also agreed to CON “modernization,” but did not approve of repeal. Attorney Mark Guilfoyle, an attorney who spoke alongside St. Elizabeth’s Sarah Giolando, sang the praises of the laws, saying they provided “significant benefits.” Interestingly, one of those supposed benefits was access to care in rural areas. But CON states actually suffer mightily from a lack of rural hospitals, with a staggering 30% fewer per capita. 

It should also be noted that medical industry backers brought up questions about malpractice insurance, birth center safety, and other issues that are not directly related to CON laws. Viewers need to recognize that other issues obfuscate the topic at hand.

Who Is Against It?

Professor Emeritus John Garen, who taught economics at the University of Kentucky, stated, “The arguments made to justify certificate of need do not stand up to careful examination… We should not have certificate of need on health care services in general.”

Dr. Matthew Mitchell, who holds a PhD in economics (and has completed an extensive body of work on CON), presented evidence from a staggering 127 peer-reviewed studies, with 425 individual tests. His testimony was the testimony of numerous researchers, and the results were overwhelmingly negative. CON laws were associated with higher mortality rates following heart attack, heart failure, pneumonia, and surgery, as well as lower rates of patient satisfaction.

Senator Shelley Funke Frommeyer testified alongside freestanding birth center owners to request they be exempted from CON. And although nobody would suggest these individuals had no conflict of interest, residents plainly expressed support for these facilities. The number of women wishing to give birth outside hospitals has skyrocketed, yet Kentucky does not have a single independent birth center. Women have been crossing state lines to reach one. 

In general, individuals with no vested interest in large hospital profits opposed CON. And a look at the opinions of the community at large made the point clear beyond the hearings. 

The Bigger Picture

The Kentucky hearings provided a good snapshot of the CON debate, as the results were consistent with the discussion across the country. Anyone looking into the subject will be hard-pressed to find many people outside hospital associations cheering on these laws. They will, however, easily find article after article from local residents, legal authorities, economists, and even government entities crusading against CON. A small group of people with a glaring conflict of interest has managed to maintain its grip on healthcare choices for residents in 35 states. And due to the immense pull of these few people, the rest of the population continues to suffer.