As you might imagine, going through the cumbersome CON application process just described would be a disaster during a public health emergency. Since 2020, Kentucky’s CON laws have been adjusted three different times to keep up with demand from public health emergencies, exposing how inflexible and potentially harmful CON laws are.
First, in March 2020, the COVID-19 pandemic forced the Cabinet to allow providers to expand facilities without seeking a CON. Under normal circumstances, adding hospital beds would require formal review by the Cabinet—which can take months or years. Under the Cabinet’s relaxed CON guidelines, providers were allowed to take actions that would normally require a CON as long as they notified the Cabinet. 1
Even under this system, filing paperwork with the Cabinet is the last thing hospitals should have been worrying about while trying to increase access to healthcare during a global pandemic.
Kentucky was hardly alone. Between 2020 and 2022, at least 24 other states with CON laws also recognized that CON laws were a barrier to care. These states also suspended or modified their CON programs. If CON laws somehow provide access to more healthcare, as proponents argue, why were most states with CON laws forced to relax them during the pandemic?
Other CON proponents argue that CON laws weren’t a barrier during pandemic surges precisely because states were quick to waive or loosen CON requirements. But patients in states with CON laws entered the pandemic with fewer hospitals per capita, which disadvantaged them:
Hospitals in states with CON laws were 27% more likely to run out of hospital beds. There was no difference in this figure between states that relaxed their CON requirements during the pandemic and those that did not. 2
One estimate predicted that ICU bed shortages would be nine times greater per capita in CON states compared to states without CON laws. 3
And the emergency suspensions were only temporary. In Kentucky and elsewhere, once the official state of emergency ended, providers were required to surrender the extra beds and equipment they had acquired. This undoubtedly deterred some providers from expanding at all.
Outside the pandemic, in March 2023, Governor Andy Beshear was forced to issue an emergency regulation to update the SHP “to ease the urgent mental health crisis by promoting greater access to psychiatric care across Kentucky.” 4
Recall that the Capacity Report, published in 2013, identified this problem. 5
Despite the Capacity Report’s clear warning, no one addressed the problem until it was too late and emergency regulations were necessary.
Without CON laws, Kentucky might have kept pace with the demand for psychiatric services. Instead, Governor Beshear’s statement of emergency reads:
There is an ongoing mental health crisis across the nation, and hospitals report that the proportion of emergency department visits due to mental health issues has increased markedly during the last few years. The expansion of inpatient behavioral health services throughout the state, including rural areas, will enhance immediate access to resources for at-risk mental health patients of such acuity that they need inpatient services and stabilization. This amendment is needed . . . to help promote access to inpatient psychiatric healthcare. 6
Despite the seriousness of the problem, the amended regulation is narrow. It permits existing hospitals to apply to convert no more than 25 hospital beds to adult psychiatric care beds under nonsubstantive review, but only if the hospital’s current occupancy rates are less than 70%. 7
The emergency regulation does not accommodate adolescent beds or new psychiatric facilities. Plus, providers could still face opposition if they file an application under this emergency regulation.
This could have been avoided. In 2021, a Louisville hospital filed a CON application to do almost exactly what this emergency regulation proposes but was stopped by Kentucky’s CON laws. On October 27, 2021, Mary & Elizabeth Hospital (ME) applied to convert 33 of its 298 licensed acute care beds to adult psychiatric beds. Its application noted that Baptist Health had recently closed its psychiatric care unit, eliminating 22 local psychiatric beds. Apart from Baptist’s closure, ME explained that it had been forced to send many patients to Our Lady of the Peace Hospital for psychiatric care following their treatment for medical issues. If it had more psychiatric beds, ME could have treated those patients in one place.
ME was trying to be proactive and increase access to care before the number of psychiatric beds dipped dangerously low. Yet the Cabinet hearing officer denied ME’s application because the SHP didn’t show a need for more beds. According to the SHP formula, the metro area’s 1.2 million residents needed a mere 185 adult psychiatric beds. The Cabinet documented 337 licensed adult psychiatric care beds in the region at the time. 8
And math is math. Because 337 exceeds 185, the hearing officer couldn’t approve the application. It didn’t matter that ME reported only 66 medical psychiatric beds were actually operational in the region. As the final order casually notes, “revisions to the SHP methodology may indeed be warranted.” 9
The situation is troubling because it could have been avoided and tragic for the patients who missed out on needed psychiatric services. If Kentucky officials had approved those 33 psychiatric beds in 2021, fewer people would have suffered without treatment, sat in ER beds for longer than necessary, or been forced to leave Kentucky to seek care.
Just two months later, in May 2023, Governor Beshear approved a second emergency regulation to address the lack of ambulance services in the Commonwealth. 10
The regulation provides:
There is an ongoing shortage of ambulance services available across the Commonwealth due to financial demands and workforce shortages. Under current regulations, a new ambulance service would be required to apply for a certificate of need before it could begin operation, which is a lengthy process that can take six (6) months to a year . . . . This will allow an ambulance provider to quickly begin serving an area where continuous ambulance services have ceased without waiting months to obtain a certificate of need. 11
Notably, the regulation acknowledges that providers often have to wait months to get a CON. As with access to psychiatric beds, it didn’t have to be this way. Since 2021, at least 11 ambulance CON applications have been disapproved by the Cabinet. Those are 11 providers that could have been alleviating this shortage.
Opposition from affected persons is especially forceful for ambulance CON applications. After reviewing 32 CON applications to provide Class I Ambulance Service submitted from 2009 through 2022, we found that the Cabinet granted nearly 90% of unopposed applications, yet it granted only 13% of opposed applications. In 13 instances (57%), the Cabinet approved opposed applications only after the applicant agreed to serve a smaller geographic area so competitors would withdraw their objections.
Despite the difficulty in getting a CON to operate an ambulance in Kentucky, the lack of access to medical transport throughout the Commonwealth has been well documented. For instance, one report from 2018 found that urban counties in Kentucky had 25% fewer ambulance providers than other states in the region. 12
These examples show the devastating effects of artificially limiting the supply of healthcare services. Even outside the pandemic, CON laws are harmful. CON laws prevent healthcare providers from scaling up in response to warnings about inadequate access to care. Ultimately, patients pay the price.