Mar 19, 2020

Now is the Time to Eliminate Certificate-of-Need Laws that Limit Hospital Resources and Space for Patients

Hospital staff, not state administrators, should decide how many beds a facility needs.
Matthew D. Mitchell Senior Research Fellow , Anne Philpot Staff Writer

The coronavirus has sent governments scrambling to address the insufficiencies of existing health care systems. Though the president took a step in the right direction by loosening restrictions on telehealth communications, the federal government is not the only source of constraints around health care. Indeed, 36 states and the District of Columbia have certificate-of-need (CON) laws, which require providers to apply for state permission before acquiring equipment or providing certain services to patients, such as drug rehabilitation centers, CT scans, or neo-natal intensive care units. By limiting the number of certificates awarded and by making the application process long and expensive, states have made care less accessible and more costly—even though CON statutes are supposed to do the opposite.

These sorts of artificial limits on health services and health care facilities are counterproductive at any time, but they could be disastrous during a widespread health crisis like COVID-19. By Wednesday afternoon, the number of cases in the United States had jumped to nearly 8,000—and this number is expected to rise dramatically. To increase accessibility of care and make treatment more affordable, states should eliminate CON laws in several essential areas.

Bed space is of primary concern. The onslaught of cases in China and Italy has stretched space to the breaking point, leading to heart-wrenching health rationing. Even in the US, where the worst is yet to come, some hospitals have already set up outdoor tents to accommodate the influx of patients. At 2.8 hospital beds per 1,000 people, the US already has fewer beds than many other countries such as Italy (3.2 beds per 1,000), China (4.3 beds per 1,000), or South Korea (12.3 beds per 1,000).

And yet, the number of acute care hospital beds that a facility is allowed is limited by CON laws in 28 states. This means a hospital cannot expand existing units without enduring an often-lengthy CON approval process. Some states not only require a certificate-of-need for a new hospital bed but also require one to transfer a bed between facilities. It is also common for states to require a CON if a hospital makes any investment above a certain dollar threshold. These sorts of rules should be repealed to give hospitals maximum flexibility. Hospitals and their staffs—not state administrators—should decide how many beds are needed.

Many states also regulate the construction of hospital facilities and medical office buildings through CON. We may not be able to build a hospital in days as they did in China. But if the situation deteriorates, states should make it possible to repurpose commercial or office space for temporary hospitals. CON shouldn’t stand in the way of these efforts.

CON laws did not make this crisis, but their elimination can help make it easier to deal with.

If you are interested in speaking with Matt Mitchell about his research, please reach out to media@mercatus.org.

Photo by Piron Guillaume/Unsplash 

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