The CON racket explained
Certificate-of-need laws require health care providers to prove that a new hospital, surgery center, or imaging machine is needed before they may build it, and state boards then let existing hospitals object to the application. In practice, the incumbent wins, and the Federal Trade Commission has warned that these laws shield market leaders from competition rather than protect patients.
The theory behind CON dates back to a 1974 federal mandate that tied health planning dollars to state restrictions. Congress repealed that mandate in 1987, yet 35 states and the District of Columbia kept the programs alive. The National Conference of State Legislatures tracks these statutes. So does the Mercatus Center at George Mason University. Both sources show that reform has stalled in most capitals, and lawmakers hear from hospital lobbyists far more often than from patients.
The process is deliberately burdensome. A new provider must project patient volume, service mix, and community impact years into the future. Then competitors may challenge those projections at public hearings. The boards apply vague standards that favor the status quo. Even winning applicants spend hundreds of thousands of dollars on consultants and attorneys. That is the point. The barrier itself deters entry.
The hospitals defending these laws do not hide their motive. State hospital associations argue that overbuilding leads to duplication and higher costs. But duplication is another word for choice, and higher costs are what CON states already experience. The industry talking points collapse once you notice who writes them.
Patients pay the price
When competitors cannot enter a market, prices rise. The Federal Trade Commission published research estimating that certificate-of-need laws increase health care spending by 3 percent to 6 percent in affected markets, and families see that cost in higher premiums, larger deductibles, and surprise bills. The hospital association thanks them for their patience.
Access also suffers. A study examining ambulatory surgery centers found that wait times in CON states average roughly 28 days for common outpatient procedures, compared with about 14 days in states without the restrictions. Rural patients drive farther because small clinics never open. Urban patients sit on lists because established hospitals have little incentive to expand capacity. A wait is a tax measured in pain, not dollars.
Quality stagnates too. Researchers at the Mercatus Center and elsewhere have linked CON programs to higher mortality for cardiac patients and fewer hospital beds per capita during public health emergencies. The argument that CON preserves access in rural areas collapses under scrutiny. Rural hospitals close anyway, and the laws prevent new models from replacing them. The patient loses twice.
Emergency preparedness offers another warning. During the COVID-19 pandemic, states without CON restrictions added beds and equipment faster than states with rigid planning boards. The lesson should have ended the debate. Instead, the boards kept their gavels.
Small clinics get locked out
Small business owners bear the brunt of the certificate-of-need burden. A physician group that wants to open an MRI clinic in Charlotte or Richmond must spend months on applications, legal fees, and hearings, while the incumbent hospital chain deploys in-house lawyers to oppose every move. The cost of compliance alone prices out independent practices. Competition becomes a spectator sport for billion-dollar systems.
The Institute for Justice, a public interest law firm, has represented multiple clinic owners who were blocked by CON boards. One ophthalmologist in Kentucky spent years fighting to add a second operating room so he could treat more cataract patients. His case illustrates how the process punishes the provider while the patient waits. The board decided that enough surgery already existed. It was not their eyesight on the line.
Nurse practitioners and physician assistants face related barriers. Scope-of-practice limits in many CON states prevent these clinicians from opening independent practices even when the market wants them. The American Medical Association and state medical societies often back those restrictions. Patients lose. Established interests win. This pattern repeats across dozens of professions and thousands of communities.
Independent physicians describe the application process as a full-time job in itself. They must hire certificate-of-need consultants, produce market studies, and prepare for hearings that can stretch across calendar years. The winners are the consultants. The losers are the patients and the entrepreneurs who never get a chance to compete.
Repeal is the only reform
Half-measures do not work. Legislators sometimes carve out narrow exceptions for rural health centers or telehealth platforms, but the boards keep their veto power, and real reform means full repeal, as Florida accomplished in 2019, followed by new surgical centers and lower prices for common procedures. Other states noticed. Most still did nothing.
States that claim CON laws protect charity care should look at the evidence. The data does not support the argument that uncompensated care rises after repeal. What rises is competition, choice, and the number of small businesses willing to serve their neighbors. Patients deserve a market, not a permission slip from their competitor.
Texas rejected CON mandates decades ago and built one of the strongest health care markets in the country. Patients there travel shorter distances for imaging, pay less for outpatient surgery, and choose among competing specialists. Other states should learn from that example instead of protecting the monopolies that fund their lobbyists.
The libertarian case here is not abstract. It is the mother waiting six weeks for a knee scan. It is the veteran driving two hours for an MRI. It is the nurse practitioner told she cannot open a clinic because a hospital board says no. Repeal CON laws. Let providers compete. Let patients choose. Anything less is protectionism dressed up as public health.
