Sign at hospital entrance
Patrick Ishmael

We often preach that boosting the supply of health care services is a necessary component of any serious and significant health care reform. Indeed, we published a whole paper about its importance last month. And along with licensure reform—to which most of that paper was devoted—doing away with the Missouri's Certificate of Need (CON) laws for hospitals would be a huge supply-side reform and victory for the state's patients. 

CON laws limit where many health care facilities can open in Missouri, effectively carving out monopolies and oligopolies for incumbent providers. Sometimes the negative consequences of CON aren't obvious to patients because new providers don't even bother entering a CON health care market, so customers never see what they aren't getting. But for patients here in the Kansas City area, the difference between a CON state like Missouri and a non-CON state like Kansas is becoming a lot clearer as new, smaller health care operations are exploding in Kansas—but not here in Missouri.

It’s the overnight beds that make micro hospitals different from free-standing ERs rooms that HCA Midwest Health and Shawnee Mission Health introduced years ago to the area.
The overnight beds also help explain why the micro hospital burst in the area will be concentrated in Kansas rather than Missouri.
To add overnight beds in Missouri, hospitals must prove the greater bed capacity is needed by going through an expensive and lengthy Certificate of Need process with the state.
Around the country, micros are blooming in Colorado, Texas, Nevada and Arizona—states like Kansas that don’t require Certificates of Need.
Other industries have their own versions of CON where the anti-competitive nature of such laws is arguably more overt, like in the case of movers. As the Pacific Legal Foundation observed,
...most states have laws like these—called Certificate of Public Convenience and Necessity or Certificate of Need laws—covering a variety of industries, including railroads; gas pipelines; limousine and taxi companies; ambulances; buses; and, of course, moving companies. By my count, 23 states now have these “CON Laws” on the books when it comes to moving companies.
Fortunately, the landscape for such legislation is turning decidedly negative. Four years ago, Missouri repealed its CON law for movers; it should do the same with hospitals in 2017. If Missouri doesn't, other states will benefit from our state legislators' inaction, and Missouri patients will continue to be disadvantaged for it.

About the Author

Patrick Ishmael

Patrick Ishmael is the director of government accountability at the Show-Me Institute.