February 1, 2022

West Virginia's Certificate-of-Need Program: Five Numbers Everyone Should Know about CON

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West Virginia House of Delegates, Health and Human Resources Committee

Chair Rohrbach and distinguished members of the House Health and Human Resources Committee:

My name is Matthew Mitchell. I am an economist at the Mercatus Center at George Mason University. For the better part of a decade, my colleagues and I have been studying certificate-of-need (CON) laws in healthcare. Last September, I authored a policy brief that reviews the history of CON laws, compares West Virginia’s CON program to the programs in other states, and provides an overview of the economic evidence suggesting that these laws harm patients and taxpayers. The brief concludes by offering several reforms—including outright repeal—that could improve outcomes for patients, particularly in low-income and rural areas. I have attached the paper to this letter.

For your convenience, I would like to highlight five numbers from the research on CON laws:

  1. Seventy-two. More than 70 peer-reviewed papers assess the effects of CON laws. These papers compare outcomes in CON states with those in non-CON states. They also track outcomes over time to see what happens in states that repeal their CON laws or pare those laws back. These studies typically include observations spanning years, if not decades, and they employ regression analyses that control for possibly confounding factors such as local economic, demographic, and health conditions. Although my colleagues and I have conducted several peer-reviewed studies, most of these papers are not authored by us.
  2. Zero. CON laws were initially intended to rein in healthcare spending, and many people continue to support CON laws out of a belief that the regulations reduce costs. They do not. Of the 30 papers assessing the effects of CON laws on spending, 0 find clear evidence that the regulations limit spending. In fact, about 60 percent of the studies that have assessed the effects of CON laws on spending find that the regulations are associated with more spending (per service or per patient), whereas the remaining studies have mixed or inconclusive results.
  3. Ninety-seven percent. By far, the most studied aspect of CON laws is their effect on access to care. The vast majority of analyses—97 percent—show that CON laws limit patient access to care (one study finds inconclusive results). The typical patient in a CON state has access to fewer hospitals, hospice care facilities, dialysis clinics, cancer treatment facilities, home health agencies, psychiatric care facilities, drug and substance abuse centers, open-heart surgery programs, revascularization programs, and percutaneous coronary intervention programs. Patients in these states have access to fewer hospital beds and are more likely to have been denied beds during the COVID-19 pandemic. These patients have access to fewer medical imaging devices. Patients in states with CON laws must travel longer distances for care, are more likely to leave their state for care, and must wait longer for care. And whereas CON programs do not seem to increase charity care, they do exacerbate Black-White disparities in the provision of care.
  4. Four times. Four times as many studies find that CON laws undermine quality than find that it enhances quality (my September brief reports that the number was three times, but more studies have since been published). In the typical CON state, patients experience higher mortality rates following heart attack, heart failure, and pneumonia. They have higher readmission rates, are more likely to die from postsurgery complications, and are less likely to give their hospitals top ratings. Nursing homes tend to get lower survey scores in CON states than in non-CON states, and nursing home patients are more likely to be restrained in CON states than in non-CON states. Home health agencies also receive lower scores in CON states than in non-CON states, and home health agency clients are less likely to see improvements in mobility. Finally, surgeries are more likely to be performed by lower-quality surgeons in CON states than in non-CON states.
  5. Four in ten. Four in ten Americans live in states with either no CON laws or very limited CON laws in healthcare (as I write, this number is growing because recent reforms in Florida and Montana are now taking effect). In these states, providers may open new facilities or expand their services without first proving to a regulator that their community needs the service in question. These non-CON states include high- and low-income, urban and rural, and coastal and intracontinental communities. Policymakers in West Virginia can learn from the experience of patients in these states to see how CON laws affect spending, access, and quality of care.

Hospital executives and policymakers often worry about what would happen in their state if their CON laws were repealed. They need not worry. And they need not speculate. They can look to the experiences of Americans in non-CON states to see what is likely to happen. These experiences, documented in dozens of careful studies, strongly suggest that patients in a state like West Virginia would gain greater access to higher-quality and lower-cost care if CON laws were to be eliminated.

I hope that this information is helpful. Please know that I would be happy to answer any questions you might have about the research or about the experiences of other states.

Attachment

West Virginia’s Certificate-of-Need Program: Lessons from Research (Mercatus Policy Brief)