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G E O R G I A’ S C E RT I F I C AT E O F N E E D
It’s Time to Repeal
The Certificate of Need Law
BY C H R I S D E N S O N
A
ccess to quality
healthcare close to
home is important
for all Georgians.
While access to care
has always been difficult for rural
Georgians, it’s recently become an
urban concern as well, with the
closure of two Wellstar hospitals
in Fulton County in 2022.
Unfortunately, as health systems across the state consolidate
and acquire independent physician practices, Georgia continues
to maintain a regulatory system
that exacerbates the problem by
protecting these systems against
most competition: certificate of
need (CON) laws.
Last year multiple bills were
introduced, including one that
passed the state Senate that
would have repealed the CON
requirement for new hospitals in
rural counties. Despite adjourning for the year without any resolution on this contentious policy
debate, both General Assembly
chambers formed study committees to further examine the issue.
While the House has yet to
publish the findings for their
study committee, the Senate
recently published their report,
calling for a full repeal of the
state’s CON laws during the 2024
legislative session.
Before continuing, though,
some history. CON laws were en-
couraged by Congress in 1975 to
control skyrocketing healthcare
costs at a time when the federal
government reimbursed providers on a “cost-plus basis” which
incentivized capital expenditures
by hospitals. Within a decade
however, Congress had abandoned cost-plus reimbursement
and stopped incentivizing states
to maintain their CON programs.
About a third of states have
eliminated their CON programs,
but Georgia still requires providers to gain approval from state
regulators if they wish to open a
new facility or expand existing
healthcare services.
HEALTHCARE ACCESS
There were laudable goals
behind the federal CON law, including a desire to contain costs,
ensure adequate and equitable
access to care, improve the quality of care and ensure care for
underserved populations. But because many states have repealed
their CON laws or pared them
back significantly, researchers
can compare outcomes in these
reforming states to states like
Georgia that have maintained
their CON laws.
Unsurprisingly, access is the
most studied aspect of CON research, comprising 132 empirical
tests across 58 papers. For every
test that associates CON laws
with better access to healthcare,
more than seven associate it with
diminished access.
Research on underserved
populations, which are defined as
being “located in rural or economically depressed areas,” is particularly applicable to the current
discussion on Georgia’s healthcare landscape. It isn’t entirely
clear how the architects of CON
thought that the regulation would
ensure care for underserved
populations; supply restrictions
tend to restrict supply, especially
to communities for whom care
is marginally profitable. It is not
surprising, then, that 80 percent of
CON studies we reviewed found
that CON laws are associated
with worse outcomes for underserved populations.
In the study by the Georgia
Public Policy Foundation, we analyzed each CON application the
Georgia Department of Community Health received from 20172022. During that six-year period,
379 applications were filed with
the state and cataloged in the
department’s online repository.
When we published the study in
April, 43 of the applications were
still waiting for the initial decision on their CON by the state.
Our analysis revealed several
notable trends. Among them:
when a competitor objects to an
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