Imagine if, in order to open or offer new services, a licensed hair salon had to prove to a government board it was necessary to the community. After complying with all safety regulations and completing other typical prerequisites, it had to somehow show locals would suffer without it.

Now imagine the community’s existing salons could testify to the board, overriding the wishes of the rest of the community members. The prospective salon would have to convince competitors to go against their own interests, and many would obviously shut down potential competition before it began. This would blatantly infringe on the rights of the business owners, which would be a true hardship for them. However, for the would-be customers, their worst likely fate would be another bad hair day.

But in the real world, the business requiring a permission slip is a healthcare provider, and the services it is prohibited from offering make the difference between life and death. This is the reality of certificate of need (CON) laws, which still operate in 35 states. Incumbent practitioners and hospitals are preventing new ones from operating, and they are consequently stifling innovative—and life-saving—medical technology.

Doctors Can’t Innovate Without Practicing

Every year, approximately 53,000 people in the United States die of colorectal cancer. It is the second-highest cause of cancer death in the country. 

It is also largely preventable.

With regular screening, most pre-cancerous polyps can be detected and removed before they progress to cancer. Unfortunately, convincing people to receive any preventive care is already challenging, and adding the term “colorectal” to the procedure does not engender a feeling of comfort in most patients. For years, the standard method of screening involved an invasive colonoscopy, and patients predictably stayed away in droves.

In 2012, Dr. Mark Baumel wanted to fight this phenomenon in Virginia by opening a virtual colonoscopy (VC) clinic. He already ran practices in Delaware and New Jersey, but Virginia presented a unique problem: it is notorious for denying CON applications. Despite the fact that no other practitioners in the state of Virginia presented this option, the CON board insisted Baumel’s services were not needed. 

Unfortunately, Baumel’s is not an isolated case. Forward-thinking healthcare experts are routinely being thwarted in their attempts to develop and utilize new technology. Entrepreneurs in Nebraska cannot use more efficient ways to get patients to medical appointments. Eye doctors cannot provide more convenient eye surgery in North Carolina. In the ultimate irony, doctors in certificate-of-need states such as Kentucky cannot tailor their services to their local culture’s needs

CON laws prohibit patients from accessing those options and prevent these doctors from designing progressively better techniques. Furthermore, it has prevented other doctors from seeing the ideas and building on them. 

Practicing medicine involves a creative process beyond rote memorization of existing techniques. But actually using that creativity is currently illegal.

Doctors Won’t Innovate Without Motivation

Not only are motivated new practitioners not able to bring their ideas to patients, but current practitioners have little motivation to create anything new themselves. Competition provides one of the main driving forces behind innovation.

Consider the VC case discussed above. This technology existed long before 2012, when Dr. Baumel tried to bring it to Virginia. In fact, the government issued the first patent on a VC machine back in 1994. But in a state where the current healthcare powerhouses know they reign supreme, they have no impetus to improve. 

Nor do ambulance companies in Nebraska have cause to create a better business model. Nor do hospitals in North Carolina have an incentive to make lower-cost surgical suites. Nor do doctors in Kentucky have an inducement to provide culturally appropriate care for a large percentage of their patients.

Complacent practitioners have every reason to simply rest on their laurels once they have managed to receive their government permission slip. Meanwhile, dedicated pioneers find themselves stymied. 

CON laws are keeping states in medical limbo, and progress will not improve until the laws disappear. This legislation would be morally wrong in the case of a hair salon. In healthcare businesses, it’s downright deadly.