Certificate of Need (CON) laws are state regulatory procedures that require health care facilities to obtain permission from the state and their competitors before opening, expanding or purchasing new equipment and technologies. The state health planning agency either approves or denies an applicant based on a set of criteria and the perceived “community need” of the proposed service. CON programs remain law in a number of states, including Maine, despite mounting evidence that they fail to achieve their intended goals.
Thirty-eight states and Washington D.C. have CON programs on the books, and the laws are supposed to control health care costs and increase access to care. Defenders of CON insist the programs limit health care spending and help distribute care to disadvantaged populations.
The Mercatus Center at George Mason University’ recently published a study challenging the effectiveness of these programs. Researchers found that CON laws are associated with higher levels of per capita spending on health care and physicians. Mercatus estimates Maine could see a change of $271 in annual per capita healthcare spending without CON.
When comparing rural areas in CON states with rural areas in non-CON states, research finds that the presence of a CON program is associated with fewer rural hospitals. In fact, CON states have fewer hospitals in general.
Mortality rates for pneumonia, heart failure and heart attacks, as well as patient deaths from serious complications after surgery, are significantly higher in hospitals in states with at least one CON regulation. Maine has five CON categories and our law contains 42 independent requirements. The application fees cost providers anywhere from $5,000 to $250,000, are nonrefundable, and can take 90 days for approval from the start of the review.
Opponents of these regulations argue the political influence inherent within the CON process subjects some healthcare facilities to unfair abuse and manipulation. When a company applies to enter the market or seeks to offer a service that is already offered by one or more of its competitors, the CON process is often used to block competition. Preventing new providers from competing within the market has proved to raise the price of medical care.
Not only do CON laws undermine the health care market, providers are at the mercy of the state when trying to evaluate immediate need for increased capacity or new technologies. These laws have proven particularly harmful amid the COVID-19 pandemic, as they stand in the way of a hospital instantly increasing bed capacity as need grows for care. That may explain why so many states have suspended these regulations in 2020 in the face of the virus.
Maine took similar action earlier on in the pandemic. Lawmakers should examine this data carefully and explore ways to end CON requirements in Maine in the upcoming legislative session.