ASC operators weighing where to build next are contending with a fast-shifting map.
Certificate-of-need laws that once locked entire regions out of new development are unwinding in some states even as tax burdens on physician-owned facilities diverge sharply from one border to the next. Layer a third factor — whether a state can actually keep physicians in the building — on top of those two, and the list of markets that clear every bar gets short fast.
Only one state clears all three bars at once. South Dakota has no certificate-of-need law, ranks second nationally for tax competitiveness and ranks third nationally for physician-friendliness — a combination no other state currently matches.
South Dakota is one of 15 states with no certificate-of-need law, allowing operators in the state to can open a new facility without first proving to a state board that the market needs it — a process that, in certificate-of-need states, can take months or years and often hinges on whether an existing hospital objects.
The tax picture is just as favorable. South Dakota ranks No. 2 overall on the Tax Foundation’s 2026 State Tax Competitiveness Index, trailing only Wyoming. The state levies neither an individual income tax nor a corporate income tax, according to the Tax Foundation’s South Dakota tax profile, relying instead on sales and property tax collections — a structure that matters directly to physician-owners of an ASC, who typically report facility income on their personal returns.
On the physician side, WalletHub’s 2026 ranking of the best and worst states for doctors places South Dakota third nationally, behind only Montana and Indiana. The state’s advantages there include some of the highest starting physician salaries in the country and one of the strongest hospital-to-population ratios — both proxies for how easily an ASC could staff a facility and keep referral volume flowing.
That combination is rarer than it sounds. Indiana ranks second nationally for physicians but still requires a certificate-of-need for new facilities. Wyoming, Texas and New Hampshire all share South Dakota’s lack of certificate-of-need review and its favorable tax code, but none cracks WalletHub’s top 10 for physicians. South Dakota is the rare state where a developer doesn’t have to trade one advantage for another.
The regulatory advantage tends to show up in the numbers, as states without certificate-of-need laws posted compound annual growth of 2% to 4% in Medicare-certified ASC development between 2019 and 2023, faster than the pace in states where new facilities require board approval.
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