A new report shows how little-understood laws are hurting patients

Oct 8, 2021 by AFPF

Thirty-five states and the District of Columbia have laws on the books that make quality, affordable health care more difficult to access. These restrictions, called certificate-of-need laws, prevent hospitals and other providers from making necessary investments in their services, equipment, and facilities without government permission.

While CON laws are intended to ensure that providers don’t create an overabundance of health care resources, they often contribute to health care scarcity, finds a new report by Americans for Prosperity Foundation.

The report analyzes the effects of CON restrictions in four states — Virginia, Iowa, Michigan, and South Carolina — and finds that these laws:

  • Make quality, affordable care more difficult to access.
  • Significantly restrict the ability of health care providers to make investments that help patients.
  • Worsen health care outcomes.
  • Promote cronyism by allowing competing providers to object to the CON applications of their competitors.

“While CON boards insist that CON programs are apolitical and applications are judged based on the law, our investigation reveals that fights over CON applications are more like political campaigns, rife with opposition research and mudslinging from incumbent providers to generate controversy and shut down new competition,” said Kevin Schmidt, one of the report’s authors. “When health care providers have to fight for government favor to provide patients with critical services, it’s the patients who lose.”

Among other conclusions, the report found that Iowa’s CON board, the State Health Facilities Council, or SHFC, rejected $250 million worth of proposed health care investments between July 2016 and February 2020.

Providers in Iowa face serious barriers to entry. Applicants seeking a CON were forced to pay, on average, $15,774 in application fees, not including the additional costs of legal and outside consultants needed to assist with the application. On top of the fees, the CON process often includes a public fight with competitors and waiting for up to 2 years for a final decision.

The result is that patients are left worse off.

Read the full report here.