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NEW REPORT: Americans for Prosperity Foundation Releases Report on True Cost of Certificate of Need Laws

Oct 7, 2021 by AFP

COLUMBIA, S.C. – Americans for Prosperity Foundation has released the results of a four-state investigation, including South Carolina, to measure the true costs of Certificate of Need (CON) laws. CON laws require health care providers to gain government approval before opening or expanding a facility, adding imaging devices and other medical technology, or offering new services. These laws often allow existing providers to object to new would-be competitors and use their incumbency status to influence government decision-making.

While these laws were initially enacted in the 1970s to control health care costs and prevent duplicative services, CON laws have become a major barrier to health care especially in rural and underserved areas in the Palmetto State. The Mercatus Institute estimates that there would be 9 more hospitals available in SC’s rural areas by ending SC’s CON compared to now.

Americans for Prosperity Foundation State Director Candace Carroll issued the following statement:

“It’s no secret that South Carolina consistently ranks at the bottom of health care rankings in the U.S. As dedicated parents and caregivers, we need to do all that we can to make our voices heard and fight against these barriers to health care. Every person deserves to have access to quality, affordable health care, regardless of where they live. For the sake of citizens across the state the wellbeing of our families must be prioritized over crony profits.”

Background: 

AFPF’s new report, Permission to Careillustrates how these laws have also harmed patients in Iowa, Michigan, and Virginia. In each state, CON raises costs, reduces access to care, and promotes cronyism of the ugliest sort. Notable examples from the report include:

  • In South Carolina, legal challenges to CON decisions delayed the openings of much needed hospitals in two counties by over a decade.
  • In Michigan, objections from existing providers led to the denial or withdrawal of close to 75% of applications to build new nursing home beds.
  • In Iowa, a cancer center claimed that a competitor’s new radiation therapy center would force it to close—delaying the new one by over a year. Yet after the new one was finally approved, the existing provider not only stayed open but also invested in a $2.2 million renovation of its own facility.
  • In perhaps the most tragic example of them all, a Virginia mother lost her baby at a facility whose prior requests for new NICU equipment were denied.

The report shows that since 2016, CON laws have resulted in nearly $1 billion in lost health care investment across those 4 states alone. The true value of health care services forfeited in each state is much greater. This is because although health care entrepreneurs may aspire to offer some services in a state, they are unlikely to submit a CON application that they know will probably be denied.