Missouri’s Certificate of Need Law Needs to Go

One of the keys to promoting patient health is ensuring that patients can actually access the care they need. Unfortunately, government regulations often get in the way. One such regulation in Missouri (and other states) is the Certificate of Need (CON) law, which essentially regulates the number of hospital beds a community can have and the sorts of equipment that hospitals can purchase.

CON laws were intended to prevent duplication of services, increase care access, and control costs. However, research and experience over the last forty years suggest that while CON laws do stop new players from entering markets, they don't really reduce cost or increase access to care. That result is intuitive; restricting competition in goods and services, whether in health care or in hamburgers, tends to restrict access and raise prices for consumers because incumbent businesses have less incentive to compete for business based on cost and quality. It's why many states have repealed their CON laws, and why Missouri should follow suit.

It's bad enough that CON laws don't accomplish what they were originally intended to do, but CON laws can also be used by incumbent health care players to keep out competition in areas where people are not getting the care they need. One example of this was made clear in a recent St. Louis Business Journal story about long-term care providers demanding that the state tighten up its CON approval process—ultimately to the detriment of patients:

Representatives from the Missouri Health Care Association and the Missouri Assisted Living Association made a presentation during a recent Missouri Health Facilities Review Committee Certificate of Need (CON) meeting calling for a change in how strictly CON procedures are enforced. According to Nikki Strong, executive vice president of the MHCA, too many long-term care and assisted living projects are being approved for areas of the state in which there is no demonstrated need….

Health Facilities Review Committee member William Krodinger said many projects that are in areas where there does not appear to be a need are approved because they are serving patients with a specific need—such as mental health or memory care facilities. Also, he said some areas look like they have an oversupply of available beds on paper because the numbers include projects that have been approved but not yet built, some of which never come to fruition.

Indeed, some health care providers want the state to act as if phantom projects are meeting the needs of Missourians, which would also protect their business models. That's good for incumbent health care providers, but it's bad for Missourians' health and pocketbooks. Rather than secure Missourians' health care, CON laws can actually imperil it. They need to go.