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Research shows there is no evidence suggesting Certificate of Need (CON) laws are helpful

On March 26th I wrote an introductory blog regarding why Certificate of Need (CON) laws in healthcare do not make sense. I follow that up with more detail on what research has shown regarding the effects of CON laws. Academic research has shown there isn’t enough evidence supporting the idea that CON laws reduce costs, increase healthcare access for low income individuals and increase quality. Instead most evidence suggests CON laws do the opposite; they raise costs, reduce access to care by limiting supply and lead to low quality services.

 CON laws raise healthcare costs

CON laws have been in place for a couple of reasons, one of the main one being controlling health costs. By limiting supply, legislators hope for hospitals to reduce costs they would otherwise incur if they could expand limitlessly. There is however little evidence supporting this point. Much evidence point out that CON laws do not only fail to reduce costs, they increases costs by reducing competition. For instance Mitchell (2016) finds evidence that suggests CON laws are associated with higher per-unit costs and higher total health care spending. Mature CON programs, specifically, result in a slight (2 percent) reduction in bed supply but higher costs per day and per admission, along with higher hospital profits.

CON laws reduce access to care

By limiting supply, CON laws reduce access to care. For instance  Stratmann and Koopman (2016) find that CON laws restrict access to healthcare in rural areas. Their evidence suggests states without CON laws regulating entry have more rural hospitals and rural Ambulatory Surgical Centers (ASCs) per capita. In  out-patient surgery and specialty care CON  laws also restrict access to ambulatory surgical and special care. They also reduce efficiency gains that come from providing care in an ambulatory setting. CON laws additionally act as a barrier to entry for surgeons who would like to develop outpatient surgical centers and specialty facilities.

By limiting the number of overall medical providers, CON laws additionally restrict the supply of technologies like imaging services. Some results have shown that residents in CON states are more likely to travel out of state to obtain imaging services than are residents of states with no CON laws. Generally states with CON laws have fewer beds, a reduced number of hospitals providing  services and a reduced number of hospitals offering CT scans.

CON laws lead to low quality health care

Research has shown little evidence to suggest CON laws have a positive effect on health care quality. Evidence suggests states with CON laws have lower quality of care for some measures like mortality rates. For instance,  James Bailey (2016)  finds that CON laws have no significant effect on all-cause mortality but estimates indicate if they have any effect, they are more likely to increase mortality than decrease it.  Stratmann and Wille (2016) also find evidence that points to the fact that restricting entry results in lower hospital quality. The researchers find that mortality rates are higher at hospitals in states with CON laws than in states without CON laws.

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