Certificate-of-need laws require healthcare providers and systems to get permission from the state before expanding or building new facilities, and they can be controversial among providers. They're particularly relevant for the ASC industry, as physicians and other players look to open more centers.
Here’s five things to know about CON laws and ASCs:
- The CON landscape is changing. Some states, like North Carolina, have become central to the fight for reform when it comes to CON laws. The North Carolina Senate proposed its budget for the next two fiscal years that would drop CON requirements in urban areas on the condition that those ASCs meet the Medicaid and self-pay threshold. South Carolina and Mississippi are two other states that have loosened their CON laws for ASCs specifically, and advocates hope more states will follow suit.
- States are split between those that do and don’t have CON laws. Here is a full breakdown of which states require them for ASCs, reported by Beckers.
- Opponents of CON laws, which include many ASC leaders, say that CON laws fail to contain healthcare costs and provide equitable access to service. They argue CON laws favor existing providers and large healthcare systems, creating a burdensome approval process that prevents smaller centers from growing.
The AMA contends that there is no evidence that CON laws effectively contain costs, and that increased “CON rigor is associated with higher costs.”
"I think certificate-of-need laws reduce the positive impact ASCs could have on the healthcare system," Michael Chwalek, senior financial analyst at Ambulatory Surgical Centers of America, told Becker's. "They restrict the number of ASCs through rationing and creating a significant barrier to entry. The time and legal and consulting fees required to gain certificate-of-need approval significantly increase the risk of starting a center."
- Proponents of CON laws argue that they prevent market oversaturation and price inflation. CON laws can also ensure that underserved communities are receiving accessible, appropriate care, according to the National Conference of State Legislature. For example, some states require health systems and facilities to have financial assistance policies or discounted care programs for low-income patients as a condition for CON approval.
- The battle against CONs is contentious in many states, Jaimie Cavanaugh, an attorney at the Institute for Justice, told Becker's earlier this year. There's "a lot of attention" in Kentucky, she said, because constituents are unhappy with their coverage options.
"I think the community started learning that the reason they only have one option is because of certificate-of-need laws," she said. "And another reason it's so dark there is because they're very close to Cincinnati, which has three hospital systems because there's no certificate of need for hospitals in Ohio. And on top of that, now there are hospitals in Ohio saying they'd be happy to come across the river and provide more options in northern Kentucky, but they can't."