“Certificate of need (CON) laws exist in various forms in 38 states and Washington, D.C. The stated goal of such laws is to keep costs down by preventing overinvestment in any single market. If regulators decide an area already has enough of any type of service, they can block new construction.
As a result, nobody in North Carolina can open or expand certain medical facilities without these regulators’ permission. Even purchasing an MRI scanner without their approval can be illegal. These restrictions prohibit Singleton from using his own clinic in New Bern for most of the surgeries he performs. He must drive two miles up the road to a competitor’s office, as it is owned by a major health care player. This unnecessary red tape increases costs and decreases scheduling options, and patients suffer.
Singleton has battled this scheme since he set up his clinic in 2024. Frustrated by a wall of bureaucracy and lack of progress, he sued in 2020 with representation from our public interest law firm, the Institute for Justice.
Getting to trial has not been easy. Wake County Superior Court tossed out his case in 2021 without discovery or witness testimony, and the North Carolina Court of Appeals upheld that decision in 2022. The state Supreme Court ruling simply allows Singleton to go back and try again.
Singleton is not alone in this struggle. The Iowa ophthalmologist Lee Birchansky fought for more than 20 years before state regulators relented and gave him permission to perform surgeries at his own clinic. In 2016, Virginia fended off a CON lawsuit from pulmonologist Mark Baumel and radiologist Mark Monteferrante. Kentucky spiked a home health care service that entrepreneur Dipendra Tiwari tried to launch in 2019. Connecticut blocked a cancer treatment center in 2022, clearing the way for political insiders to proceed unimpeded with their own cancer treatment center 45 miles east. None of these cases involved health or safety concerns.
CON laws work great for existing providers, who do not have to worry about rivals setting up shop and attracting patients with superior service. This also means existing providers can also take their doctors and nurses for granted, as CON laws keep rivals far away, limiting their ability to poach talent.
California, Texas, and 10 other states operate without CON laws. None of these states has experienced any measurable harm. In fact, multiple studies show benefits. For example, Matthew Mitchell, a researcher at George Mason University’s Mercatus Center, says states that got rid of their CON laws have more hospitals and surgery centers per capita, along with more hospital beds, dialysis clinics, and hospice care facilities.”
https://reason.com/2024/10/29/doctor-fighting-to-break-certificate-of-need-barrier-in-north-carolina/
“Before being able to break ground on a new hospital there, Piedmont Medical Center had to navigate the state’s Certificate-of-Need (CON) process, which in this case required going all the way to the state Supreme Court to fend off a legal challenge from a competitor. All that to build a 100-bed facility that the South Carolina Department of Health and Environmental Control had determined, all the way back in 2004, was indeed needed in the region.
Unfortunately, “need” is not enough in many cases. Like how zoning laws and mandatory environmental reviews might be well-intentioned policies but are frequently wielded by “not in my backyard” (NIMBY) activists as a way to tangle new development in costly piles of red tape, the CON laws on the books in many states can be used by existing hospitals to delay or prevent new facilities from opening.
That’s exactly what happened in Fort Mill. A hospital chain based in Charlotte challenged Piedmont Medical Center’s plans for a new facility, then sued to block the state’s decision to give Piedmont permission to build the hospital. The litigation cost thousands of dollars and delayed construction by several years. Researchers at the Americans for Prosperity Foundation, a free market think tank, argue that even the threat of such lengthy, expensive reviews ends up deterring investments that would otherwise take place.”
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“Artificially limiting the supply of health care services can be a major issue when a pandemic or other emergency strikes, of course, but CON laws harm public health even without the help of a novel coronavirus. States with CON laws have higher mortality rates for patients with pneumonia, heart failure, and heart attacks, according to research published in 2016 by the Mercatus Center, a free market think tank that argues for repealing CON laws. Other studies show that CON laws contribute to health care shortages in rural areas because they force medical providers to focus on wealthier, more populated areas in order to make up for the added costs imposed by the CON process.”
“An insufficient supply of ICU beds is one of the acute crisis points of the pandemic. When hospitals run out of room to treat patients who need the most help, doctors and hospital administrators must make difficult triage decisions. This affects not just COVID patients but anyone else who might be in urgent need of medical care—car crash victims or those who’ve had heart attacks—and it almost certainly means that some people will die who otherwise may have survived.
It’s a crisis that has been made worse by outdated and ineffective government regulations—known as “Certificate of Need” (CON) laws—that actually reduce the number of available hospital beds by requiring that hospitals get permission from the state before adding capacity.
In Alabama, which is one of 27 states that subjects the supply of hospital beds to CON oversight by the state, we’re now seeing some of the consequences of these rarely thought-of policies. While the surging number of serious COVID cases there and elsewhere across the country is largely the result of unvaccinated Americans being hit by the highly contagious delta variant, a restricted supply of hospital beds is not helping.
Since March 2020, states that use CON laws to regulate the supply of hospital beds have seen an average of 14.99 days per month where ICU capacity has exceeded 70 percent, according to Matthew Mitchell, a senior research fellow at the Mercatus Center who crunched Department of Health and Human Services (HHS) data and shared his findings with Reason. Meanwhile, states that do not have CON laws governing the supply of hospital beds have seen an average of just 8.65 days per month with ICU capacity exceeding 70 percent, according to Mitchell.”