THE INSIDIOUS BURDEN:
Certificate of Need Laws
As a nation, we profess an unwavering commitment to accessible, affordable healthcare for all. Yet across vast swaths of America, an antiquated regulatory regime persists, throttling competition and artificially inflating costs in direct conflict with our espoused values.
I speak of the pernicious Certificate of Need (CON) laws still in force in over thirty states.
For the uninitiated, CON laws require healthcare providers to obtain explicit government approval before expanding facilities or deploying new medical equipment and services, ostensibly to prevent overutilization and control costs. In practice, however, they have devolved into a cronyistic racket—existing providers exploit the process to erect formidable barriers to market entry and stifle competition from innovative upstart challengers.
The casualties of this protectionist folly? Patients, employers bankrolling exorbitant health plans, and the economic vitality of the very states perpetuating this dysfunctional paradigm. Let's examine the overwhelming evidence:
Diminished Access to Care
A recent national study found that CON laws are associated with 13% fewer hospitals and 14% fewer hospital beds per capita, contributing to depressed healthcare access, especially in underserved communities.
The anti-competitive effects exacerbate existing disparities, as deep-pocketed providers systematically extract concessions during the CON process, effectively redlining swaths of lower-income markets starved for new facilities.
The impact transcends hospitals. Imaging centers, ambulatory surgical centers, and other ambulatory care settings face artificial supply constraints, forcing patients into higher-cost settings to receive routine procedures and diagnostic tests. In an era of soaring healthcare expenditures, perpetuating such flagrant inefficiencies is borderline criminal fiscal malpractice.
Inflated Costs, No Quality Improvement
If the justification for limiting competition is to optimize quality and rein in wasteful spending, the data reveals an abject failure on both fronts. Numerous studies have found zero correlation between CON laws and measurable improvements in quality metrics.
Meanwhile, research published in the Quarterly Journal of Economics estimates CON laws directly inflate healthcare spending in the U.S. by a staggering $200 million per year.
Employers shoulder the brunt of these inflated costs through skyrocketing premiums for their sponsored health plans as monopolistic providers run roughshod over impotent payers. This unsustainable cost escalation erodes businesses' competitiveness and constricts growth and hiring, a wholly unnecessary millstone on economic progress.
Loss of Investment, Job Creation
Beyond increasing direct costs, CON laws actively repel new investment in states that maintain them. National health systems and specialized providers routinely bypass these unfriendly markets in favor of locales welcoming their capital and the ancillary economic stimulus of construction projects, payroll spending, and lucrative corporate partnerships.
A 2016 study estimated that states without CON laws generate over $3.5 billion more in healthcare-related investment annually – funds channeled into facility modernization, IT infrastructure, and cutting-edge medical technologies benefiting patients and communities. Furthermore, over 100,000 permanent jobs directly stem from this elevated investment activity in non-CON states.
The sheer breadth of stakeholders harmed by these misguided policies is genuinely staggering – from rural patients unable to access advanced care within a reasonable distance to employers hemorrhaging profits to subsidize runaway health costs, to municipalities and entire state economies foregoing an endless stream of investment, construction activity, and job creation.
Protecting Monopolies, Harming Citizens
So, how did such a pernicious regime become so deeply entrenched across swaths of the nation? The answer lies in the immense political clout wielded by existing large health systems and medical associations, which lobby intensely to preserve CON laws under the guise of ensuring adequate health planning and quality control.
Yet this disingenuous obfuscation belies their true motives – safeguarding regional fiefdoms and monopolistic pricing power over a captive consumer base with no alternatives. Patients and employers are the greatest victims of these nefarious machinations, perpetually gouged while "protected" from the competition that could liberate them.
In the 21st-century knowledge economy, erecting artificial barriers to innovative new business models is the antithesis of a prosperous, growth-oriented society. Nowhere is this more evident than in restricting healthcare provision, a vital human service upon which all productivity and flourishing depend.
Healthcare is too precious to be subjugated by self-serving special interests, no matter how cloaked in the rhetoric of public stewardship. Dismantling these pernicious CON schemes in the remaining states should be an urgent priority - our ethical obligation to the patients we serve, the businesses we support, and the communities that accommodate our economic activity.
For those entrusted as stewards of American healthcare, reconciling ourselves with this burden of moral leadership has never been more imperative.
It's time we finally eradicate Certificate of Need laws once and for all.
States with Certificate of Need Laws for Hospitals:
Alaska
Arkansas
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Illinois
Iowa
Kentucky
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Oregon
Rhode Island
South Carolina
Tennessee
Vermont
Virginia
Washington
West Virginia
Wisconsin
-Rojas out.
The Courage to Choose Better
Your mission is caring for patients, not endlessly safeguarding against threats. However, private practice demands the perfect employee benefits, cyber security coverage, workers' comp solutions, property and casualty, and strategies to de-risk your payer mix.
Founded by Dutch Rojas, PhyCap Benefits, Inc., has 150 years of collective supply-side healthcare delivery expertise. We tailor complete coverage solutions to protect what allows you to practice with confidence. PhyCap Benefits is the partnership that lays the foundation for building a sustainable and enduring legacy practice.