A Certificate of Need (CON) is a state-issued document that, in effect, gives permission for a healthcare facility to expand or build after public hearings have been held and studies of existing capacities have been done. In the 1970s, when CONs were introduced, the theory was that over-building created more market power for those holding CONS, leading to more health care spending and better access to indigent care.
However, a 2014 study showed that while CON holders did enjoy increased market power, there was no consequent increase in indigent care. In fact, the true result was a decrease in both beds and access to certain kinds of care (see https://www.mercatus.org/…/do-certificate-need-laws-increas…). The federal law was repealed in 1987 and Indiana’s law was repealed in 2000. Fifteen states have repealed their CON laws and many more states have weakened them.
However, regulations make jobs for politicians and–once enacted–the power and fee revenues they provide are difficult to give up. CON in many states include imaging, surgical centers, nursing homes and more. Here is the complicated regulatory grid: https://www.mercatus.org/…/con_table_2_regulated_services_c…. Note that Nursing Homes are among the most regulated of all constructions.
C. Northcote Parkinson stated a law of human nature in his “Law of Multiplication of Subordinates,” which can be stated as follows: Given the choice, Person A would rather
be allowed to hire Persons C and D to work for him as subordinates and maintain oversight of a larger department versus being given the opportunity to run a smaller department and transfer half of his department to Person B.
And so it is with CON. Hospital A, threatened by competition—the building of a new hospital by B–will always find there is no need for B to build a new hospital. They will deduce that their expansion is the best option.
And so, what is “need”? If there are “adequate” bed numbers, but some are poorly maintained, then might one “need” a new manager? If tens of millions in profits from one hospital are paid to corporate management and not reinvested for better quality, does that constitute a “need”? Would it be so if access to new equipment is effectively rationed so that less modern equipment might be used longer, through denial of a CON? But the point is moot in Indiana where there is no CON law. This makes the attached talking points from Lutheran Health Network (LHN) a matter of personal debate, but not legal conflict. A rational person may reach the conclusion that a new facility with different quality goals and more rapid repair of its entire network, not mere capacity, may answer the question of what is truly “needed.”