Certificate of need (CON) laws have operated in the healthcare sector since 1964, despite their overwhelming unpopularity with economists and legal experts. These laws allow existing medical businesses to prevent new ones from opening, based solely on the pretext that no new medical practitioners are “needed” in the area. As with virtually any restriction on competition, they lead to higher prices, service scarcity, and longer travel and wait times.

These laws have retained their staying power due to their benefit to powerful medical organizations rather than to patients. Medical behemoths use their ample money and time, both in the legislature and the community, to lobby against newcomers. This includes writing op-eds in local publications, where hospital CEOs and associations often tout the supposed benefits of CON. 

By examining erroneous claims made in these pieces, readers will be better armed to make an informed opinion about the true effects of CON laws. Ashley Herrington, CEO of Kentucky’s Owensboro Health Twin Lakes Medical Center, recently composed such an article, and it’s important to point out some flaws in her logic. 

Claim: CON Laws Increase Rural Community Access

Fact: The 35 states with CON laws have, on average, 30% fewer rural hospitals per capita. In fact, some of the most restrictive states have seen mass rural hospital closures. The 15 states that have rescinded their laws have seen none of the impact predicted by CON advocates.

No matter how well-meaning, people who try to protect one rural hospital by banning its competition are clearly harming all potential patients. Basic math and economic principles show restriction does not create a multiplication of services.  

Claim: CON Laws Increase Access For Low-Income Patients

Fact: Although the decreased competition purportedly allows the protected hospitals to provide more indigent care, neither theoretical nor statistical evidence reveal any increase in charity care under CON. This is due at least in part to the fact many medical providers offer free services to indigent patients of their own volition, but they obviously cannot do it if they are prohibited from practicing. 

Dr. Jay Singleton, a North Carolina eye surgeon, opened a clinic in 2014 and requested a CON to open an adjoining surgical suite so his patients would not have to arise mid-surgery to finish procedures at the hospital. Singleton does not charge his indigent patients. Yet, a decade later, his expensive and time-consuming battle to get a CON rages on. North Carolina has repeatedly chosen to protect their existing hospital by refusing to grant him one. And his case is far from unusual.

Furthermore, simple supply and demand theory indicates overall healthcare spending will increase under CON, and statistics bear this out because of monopoly power to drive up prices. Healthcare spending is 3% higher overall in CON areas, as well as 12% higher for people with significant health problems. Low-income patients who do not qualify for “free” care are hurt by these climbing prices. 

Claim: CON Increases Access To Care For The Aging Population

Fact: CON laws restricting nursing homes and hospice organizations are some of the most ubiquitous and strict. Even when South Carolina recently eliminated most of its CON rules, it kept the ones governing nursing homes. But statistics clearly indicate this tendency on the part of states has been nothing but devastating for the rapidly growing elderly population. Despite the demographic of individuals aged 65 and above growing at its fastest rate in a century from 2010 to 2020, the number of nursing home beds in roughly that same period decreased in 86% of counties in the country. 

Under CON laws, states frequently refuse to grant permission for new facilities. When Michigan predicted a need for 3,000 additional nursing home beds, dozens of hopeful new organizations submitted CON applications. Existing facilities protested and succeeded in having four-fifths of prospective nursing homes denied CON permission. This cannot be attributed to anything other than legal protectionism and has exacerbated the crisis in elder care. Almost half of all nursing homes in the country have waitlists, and 55% are turning away patients outright. 

CON laws also correlate to lower nursing home patient satisfaction rates. Whether they are designed to improve quantity or quality, CON laws fail the elderly. 

Claim: CON Increases Access For Patients

Fact: CON increases access to business for healthcare monopolies. It ensures them a steady supply of patients who have nowhere else to go. Despite lower patient satisfaction, higher prices, and longer wait times, patients in CON states have no choice but to tolerate the healthcare providers who succeed in obtaining a CON and then pulling the ladder up after them. It’s understandable that existing providers want to protect their business; it’s unconscionable that legislators continue to allow them to do it at the expense of patients.