Certificate of Need (CON) laws in healthcare do not make sense
Certificate of Need (CON) laws are rules that regulate the establishment or expansion of health care facilities. CON Laws exist to restrict duplicative services and therefore prevent rising health care costs. States with CON laws require hospitals wishing to expand capacity to prove there is a need for their service.
Currently 35 states and Washington DC maintain some form of CON program. Minnesota, while not officially considered a CON-law state is one of the 3 states with rules that function similarly to CON laws. Minnesota has a hospital bed moratorium law which requires hospitals to get approval if they wish to add hospital beds. Minnesota requires the same of Nursing homes, Immediate care facilities for persons with developmental disabilities and radiation therapy facilities in certain locations. Minnesota also requires any organizations trying to obtain a hospital license to get approval.
Effect of CON laws
This is the logic behind CON laws: Hospitals incur fixed costs, and if they have too much capacity which they cannot fill they will charger higher costs for used beds in order to cover those high costs, therefore driving up costs. CON laws are there to prevent such rise in costs.Research has however shown however that CON laws do not lead to low costs. Findings show that controlling for other factors “CON laws seem to limit access to healthcare, fail to increase the quality of care, and contribute to higher costs.”
Additionally there is proof that repealing CON laws is highly beneficial to states.
Researchers have found that states that have removed these rules have more hospitals and more ambulatory surgery centers per capita. They also have more hospital beds, dialysis clinics, and hospice care facilities. Patients in non-CON states are more likely to utilize medical imaging technologies and less likely to leave their communities in search of care. Though CON advocates sometimes claim that the rules protect rural facilities, states without CON laws have more rural hospitals and more rural ambulatory surgery centers than states with CON laws.