The pros and cons of Certificate of Need repeal

A move is underway in at least two states to repeal or revisit certificate of need (CON) laws, which regulate healthcare expansion. The law prohibits providers from entering new markets or expanding their organizations without the approval of state regulators. Opponents say the regulations hurt competition. But proponents claim a repeal could reduce or eliminate certain services, limiting patient access to care.

Thirty-six states and the District of Columbia currently have CON laws. Among them--for the moment--is Virginia, the 12th most populous state, but ranked in the bottom third of states for capacity to treat patients overnight, according to Michael W. Thompson, chairman and president of the Thomas Jefferson Institute for Public Policy, in an opinion piece for Moreover, an analysis by the Mercatus Center at George Mason University found the state has 10,800 fewer beds due to the law.

The state recently approved legislation to create a working group that will look at reforming the CON law. Thompson hopes lawmakers will do away with the regulation. While the original goals of CON laws were to control healthcare costs and ensure Virginians would have access to care, he writes that "in reality this law artificially creates monopolies for healthcare services, stifles competition and prevents communities from receiving vital medical services."

However, proponents of CON says the law protects patient access to services. A repeal, writes Mary N. Mannix, president and CEO of Augusta Health, 255-bed community hospital in Fishersville, "wouldn't lead to new hospitals with new beds enabling patients to shop for less expensive care." Instead, she writes, "niche healthcare businesses" would take advantage of the deregulation to enter communities and offer healthcare services--but with profitability as their top priority rather than community need.

Mannix says the number of ambulatory surgery centers would likely increase if the law was repealed. The result would mean community hospitals would bear the financial brunt of providing unprofitable services, often to indigent patients, while losing revenue from the profitable services provided by the ambulatory surgery centers. 

This legislative session, the South Carolina House passed legislation that would repeal the state's CON law, FierceHealthFinance previously reported. Gov. Nikki Haley (R) previously attempted to suspend the law due to budget concerns in 2013, but after a lawsuit from Palmetto State providers, the state Supreme Court ruled suspension required approval from the legislature.

To learn more:
- read Thompson's opinion piece
- here's the analysis
- here's Mannix's piece