Since 1973, Tennessee has restricted the supply of health care with certificate-of-need (CON) programs. These programs prohibit health care providers from entering new markets or making changes to their existing capacity without first gaining the approval of state regulators. Research shows that reforming or repealing these laws would improve both the quality and acessiblity of health care for Tennesseans while lowering its cost.
Healthcare Services that require a CON in Tennessee as of January 2020*
Ambulatory Surgical Centers (ASCs)
Burn Care
Cardiac Catheterization
Home Health
Hospice
Hospital Beds (Acute, General Licensed, Med-Surg, etc.)
Intermediate Care Facilities (ICFs) for Individuals with Intellectual Disabilities
Linear Accelerator Radiology
Long-Term Acute Care (LTAC)
Magnetic Resonance Imaging (MRI) Scanners
Neonatal Intensive Care
New Hospitals or Hospital-Sized Investments
Nursing Home Beds / Long-Term Care Beds
Open-Heart Surgery
Organ Transplants
Positron Emission Tomography (PET) Scanners
Psychiatric Services
Radiation Therapy
Rehabilitation
Substance/Drug Abuse
CON restrictions are in addition to the standard licensing and training requirements for medical professionals, but are neither designed nor intended to ensure public health or ensure that medical professionals have the necessary qualifications to do their jobs. Instead, CON laws are specifically designed to limit the supply of health care and are traditionally justified with the claim that they reduce and control health care costs. The theory is that by restricting market entry and expansion, states will reduce overinvestment in facilities and equipment. In addition, many states—including Tennessee—justify CON programs as a way to cross-subsidize health care for the poor. Under these “charity care” requirements providers that receive a certificate of need are typically required to increase the amount of care they provide to the poor. These programs intend to create quid pro quo arrangements: state governments restrict competition, increasing the cost of health care for some, and in return medical providers use these contrived profits to increase the care they provide to the poor.
How to Reform State CON Laws
Eleven states have already done away with their CON regulations, and many legislators rightly see CON repeal as a common-sense way of improving health care in their states. While full repeal is best, there are still ways to make meaningful reforms happen even when full repeal is not feasible.
