CON-Certificate of Need State Laws

Certificate of Need (C.O.N.) programs are aimed at restraining health care facility costs and facilitating coordinated planning of new services and facility construction. Many "CON" laws initially were put into effect across the nation as part of the federal "Health Planning Resources Development Act" of 1974. Despite numerous changes in the past 30 years, most states retain some type of CON program, law or agency as of 2016.

Intent and Structure of CON

The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation. Price inflation can occur when a hospital cannot fill its beds and fixed costs must be met through higher charges for the beds that are used. Bigger institutions generally have bigger costs, so CON supporters say it makes sense to limit facilities to building only enough capacity to meet actual need or demand.

CON programs originated to regulate the number of beds in hospitals and nursing homes and to prevent purchasing more equipment than necessary. Mandatory regulation through health planning agencies determined the most urgent health care needs, contributed to solutions for these needs and attempted to manage the fluctuations in prices often found in a competitive market. The intent was that new or improved facilities or equipment would be approved based primarily on a community’s genuine need. Statutory criteria often were created to help planning agencies decide what was necessary for a given location. By reviewing the activities and resources of hospitals, the agencies made judgments about what needed to be improved. Once need was established, the applicant organization was granted permission to begin a project. These approvals generally are known as "Certificates of Need."

History

The first national law related to this issue was the Hill-Burton Act in 1946, which was intended to control increase the supply of medical facilities in the country.

In 1964, New York became the first state to enact a statute granting the state government power to determine whether there was a need for any new hospital or nursing home before it was approved for construction. In 1974, the federal government tied funding to CON programs. The 1974 federal Act required all 50 states to have structures involving the submission of proposals and obtaining approval from a state health planning agency before beginning any major capital projects such as building expansions or ordering new high-tech devices. By 1975, 20 states had enacted CON laws; by 1978, 36 states had enacted them. Eventually, all states except Louisiana enacted such laws.

The federal mandate was repealed in 1987, along with the associated federal funding. In the decade that followed,

• 14 states discontinued their CON programs. New Hampshire was the most recent repeal, effective 2016.
• 34 states currently maintain some form of CON program. Puerto Rico, the US Virgin Islands and the District of Columbia also have CON programs.
• 3 states have variations, noted on the map and list below.

States that have retained CON programs currently tend to concentrate activities on outpatient facilities and long-term care. This is largely due to the trend toward free-standing, physician owned facilities that constitute an increasing segment of the health-care market.

Interactive Map of State CON Laws

Scroll over the map below and click on the states to retrieve a list of the facilities covered under the CON laws of each state.