Certificate-of-need laws, established decades ago in an attempt to prevent health services from being unnecessarily duplicated within a geographic area, have become some of the most controversial policies in healthcare.
A briefing paper published Aug. 11 by the Cato Institute, a libertarian think tank, analyzed nearly 130 studies covering CON, including what those laws actually do to access, cost and quality.
The authors, Stephen Slivinski and Matthew Mitchell, utilize that research to argue that CON laws tend to shrink the supply of care, and patients bear the cost.
Here are 13 things to know.
1. Certificate-of-need laws remain widespread. Thirty-nine states require a CON for at least one healthcare service or technology, and 30 states require one for four or more services or technologies, according to the report.
2. The laws touch more than 30 services. States use CON requirements to regulate hospital beds and expansions, ASCs, urgent care and birthing centers, psychiatric and substance-use treatment facilities, nursing homes, dialysis clinics, home health and hospice services, CT scanners, MRI machines and air ambulances, among other things. Nursing homes, psychiatric services and hospitals are the most commonly regulated; air ambulances, ultrasounds and subacute services are among the least.
3. Getting approved can take months or years. Applicants must prove to regulators that a new service is needed, a process that often requires hiring specialized consulting firms to navigate. Some providers cited in the report said they lost hundreds of thousands of dollars in forgone profits while their applications were pending.
4. Existing providers can weigh in on their own would-be competitors. Incumbent providers are often permitted to participate in the approval process for new applicants, and approval rates vary widely by state — 51% in Virginia, 57% in Georgia and 77% in Michigan, per the report.
5. A review of 128 studies found the laws mostly backfire. Across 458 statistical tests examining CON effects, 53% linked the laws to a “bad” outcome such as higher spending, reduced access or lower quality of care. Only 12% found a desirable outcome; the rest were mixed or inconclusive.
6. The laws are tied to higher spending. Of 45 tests that measured spending per service, 60% found CON requirements associated with higher spending, compared with 7% that found lower spending.
7. They’re linked to reduced availability of care. Among 88 tests measuring service availability, 80% found the laws reduced access, compared with 7% that found they increased it.
8. Underserved communities fare worst of all. Of 24 tests examining the laws’ effect on access for underserved populations, 88% found a harmful effect and none found a beneficial one.
9. States that loosened or repealed their laws mostly saw outcomes improve. Of 42 studies comparing outcomes before and after CON reform or repeal, more than two-thirds found improved outcomes, and just one found that outcomes worsened after a repeal.
10. Rural hospitals are far scarcer in certificate-of-need states. In the lower-income states examined, non-CON states averaged 21.5 rural hospitals per 100,000 rural population, compared with 7.4 in certificate-of-need states. Every non-CON state analyzed had more rural hospitals per capita than every CON state except Iowa.
11. Home health and hospice access show some of the starkest gaps. States without a home health CON requirement averaged 3.37 active home health providers per 100,000 people, compared with 1.88 in states that require one — an 80% gap. Hospice providers showed more than a 2-to-1 difference along the same lines.
12. Diagnostic imaging is harder to access in certificate-of-need states, too. States without an MRI certificate-of-need requirement averaged 1.98 hospitals with MRI services per 100,000 people, compared with 1.26 in states that require one — a 57% gap. CT scanner access showed a similar, 47% gap.
13. Nearly a third of Americans live without any certificate-of-need requirements. Thirty-two percent of the U.S. population lives in a state with no healthcare CON laws, and 42% live in a state with no requirement or only limited ones, according to the report.
Industry groups and providers with a financial stake in existing CON requirements are typically the most vocal opponents of reform, the report’s authors note, often warning that loosening the laws would raise costs or force hospital cutbacks.
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