Certificate of Need Laws Reduce Choice in Health Care
Imagine if you wanted to open a new hardware store and you needed a “Certificate of Need” issued by the state or local authority that your hardware store was needed. Needless to say, incumbent hardware stores would already be well armed with strong arguments that your hardware store was not needed. Crazy? Yes. Un-American? Yes. Unfortunately, these Certificates of Need exists in most U.S. states for hospitals or other facilities.
Scholars at the Mercatus Center have published a new ranking of states’ CON laws, finding that sates with Certificate of Need programs are associated with:
- 131 fewer beds per 100,000 persons.
- A reduction by between 1 and 2 hospitals providing MRI services per 500,000 persons.
- A reduction of 37 percent in the number of hospitals offering CT scans.
What was the original argument for the certificates of need for hospitals? I would be curious to understand why this started in the first place since it does seem very un-American.
For a start:
http://en.wikipedia.org/wiki/Certificate_of_need
“A number of factors spurred states to require CONs in the health care industry. Chief among these was the concern that the construction of excess hospital capacity would cause competitors in an over-saturated field to cover the costs of a diluted patient pool by over-charging, or by convincing patients to accept hospitalization unnecessarily.[2]”
Interesting.
But . . . why, then, do we not have similar concern for systematic excess capacity, and over-charging to pay for it, in other areas of the US economy? Why do organizations outside of health care seem to find it difficult to convince customers to accept their products and services unnecessarily?
Think of, say, grocery stores. Or construction companies. Or local hardware stores. Or accounting firms. Or office-supply stores. Or flower shops. Or department stores. Etc, etc. There are no certificates of need in these businesses. Isn’t it reasonable to ask, why not?
Because people spend their own money directly. There is self-correction in the system, which does not happen in health care.
The slogan the central planners use is “a bed built is a bed filled.”
Can we have a CON for pharmacies? there seems to be a Walgreens and CVS across the street from each other every other mile here in Florida.
Thank you but how is that a problem? If I think of one place in U.S. health care where focus on the customer’s needs, instead of the bureaucracy’s needs, is paramount, I think of the pharmacy.
When was the last time you heard someone say, “I went to the pharmacy six months ago to fill a prescription. On the way out I bought some shampoo and sunscreen. Because I had only a few minutes for lunch, I bought a fresh sandwich and salad, too. And I am still wading through the claims and invoices and EOBs from my health plan!’
It never happens.
Not surprising that Vermont has the worst rating on CONs! Everything else controlled by the State, relating to healthcare, has gone to “hell in a hand basket” This is one of the reasons – reduced competition, restricted services and facilities !
And the governor wanted to go for single payer, using a section 1332 Obamacare waiver. But he bailed out because the cost was too high.
I’ve filled out a CON in Maryland which publicizes their CON processes and it seems to me that not one CON has been denied over the past couple of years as it’s simply a massive bureaucratic process that companies have to go through in order to do business in MD. Some of the MD Health Commission responses to CONs are admissions that patients don’t necessarily come only from Maryland as they could come from neighboring or out of state so it’s almost irrelevant if one facility opens up across the street from another since internet marketing and an increasingly savvy healthcare population are willing and able to traverse state lines to get healthcare. By their own admission they admit there’s no good Reason for CONs anymore.
Thank you. Also on my “to do” list is an examination of the all-payer database in Maryland.