A certificate of need (CON) is a government-mandated permission slip that is required before a provider can open a healthcare facility, acquire new equipment, or offer a new service. Without a CON, which can be difficult or sometimes impossible to get, new providers are locked out of the market. As a result, patients suffer. Kentucky adopted its first healthcare CON law in 1972. While 34 other states plus Washington D.C. also have CON laws today, these laws vary greatly among locales. States like Indiana, Montana, and Ohio apply CON laws only to nursing homes. Others, like Alabama, Kentucky, and New York, maintain more than 30 different CON requirements for facilities, services, and equipment. Nearly 40% of Americans live in a state with only one or zero CON laws and about a third of the country lives in a state entirely free from healthcare CON laws.
This report does several things. We begin with a brief primer on the history of CON laws. Then, we offer a description of Kentucky’s CON laws, followed by a summary of recent CON reforms. Next, we walk through the CON application process (spoiler: it’s lengthy and expensive!). After that, we describe recent instances when CON laws were loosened or amended because they were harming public health. To wrap up this part of the report, we explain the trends in Kentucky’s CON applications since 2019. For instance, an objection from an existing provider decreases the chance the Cabinet for Health and Family Services will approve a CON application by nearly half and almost doubles the time until a final decision.
Next, we dig into the academic research. Historically, some people have hesitated to reach a firm conclusion about whether CON laws produce positive or negative outcomes. True, some studies show that CON laws are harmful (they lead to diminished access, higher mortality rates, and higher costs). Others find that CON laws might provide limited benefits (they are associated with greater volume for incumbent providers, which can lead to better outcomes for certain procedures). To resolve this debate, we reviewed all the academic literature we could find—128 academic studies. The results are alarming: CON laws harm patients, harm hospitals, harm communities, and harm payors. Indeed, 89% of the tests show that CON laws lead to bad or neutral outcomes.
Given our findings, the choice seems obvious. Repealing CON laws will create more opportunities for Kentuckians and will allow existing healthcare providers to better respond to their patients’ needs. We are hopeful that this report will spur practical healthcare solutions.